Market NewsNewsH1 luxury recovery, clouded by caution

H1 luxury recovery, clouded by caution

The Savigny Luxury Index (“SLI”) gained 2.8 percent this month, a touch more than the MSCI’s 2.6 percent gain. First-half results provided further evidence of the luxury sector’s recovery, although caution over currency headwinds dampened investor enthusiasm, Business of Fashion reported.

Strong results continued to pour in from different segments of the luxury industry: at one end, leather goods primo Hermès announced record-breaking first-half results, achieving its highest operating profit ever with a margin of 34.1 percent; at another, hard luxury leader Richemont announced a sales growth of 12 percent for the first five months of its current financial year (ended March 2018), said the report.

This seemed to confirm that the luxury watch sector has finally bottomed out, although the figure was boosted by a buyback of watch inventory in order to clear up the supply chain and prevent a grey market from developing. Whilst both companies’ results echoed the good feedback from the luxury sector in general, Hermès poured cold water on investor hopes by pointing to a looming currency issue if the euro continued to strengthen, the report said.

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