Goldman Sachs and J.P. Morgan jointly issue a warning: the luxury goods industry's difficult situation will worsen

Recently, analysts from Goldman Sachs and Jefferies have warned that with the continuous slowdown in global demand for luxury goods, the profitability of the luxury goods industry will further deteriorate.

A basket of stocks tracked by Goldman Sachs fell by 3.2% at one point, hitting the lowest level since the end of 2022. Previously, analysts at the bank predicted that the industry would not grow this year, falling below the earlier expectation of 5% growth.

Analyst Louise Singlehurst stated: "We expect the next six months to be very challenging. While the stock market has already digested some weakness, we continue to see gradually declining risks."

In a research report, Morgan Stanley also pointed out that as luxury prices rise, middle-class consumers are being squeezed out of the market, with consumers more willing to purchase lower-priced entry-level products.

Furthermore, the performance of the luxury goods market in the United States has been poor, with weak sales growth. The correlation between household wealth and luxury spending has weakened, with wealth mainly concentrated in the elderly population, while the younger generation is the main consumer of luxury goods.

Since mid-March, Goldman Sachs' luxury goods stock portfolio has fallen by about 25%, while the broader Stoxx Europe 600 index has risen by about 2%.

Shares of LVMH Moët Hennessy Louis Vuitton, a company producing high-end clothing, handbags, and jewelry, have fallen by nearly 18% so far this year.

Burberry Group has dropped by nearly 58%.

Jefferies has lowered its expected pretax profit for 2025 by 7%. Analyst James Grzinic has downgraded Burberry and Swatch Group to underperform, and lowered LVMH's target price by 13% to 600 euros