The world’s largest luxury goods companies may not be immune from the effects of tariffs, Yahoo Finance’s Brian Sozzi reports.
“The new import duties are worse than what had been anticipated, and a material headwind to the sector,” JPMorgan analyst Chiara Battistini wrote in a note to clients.
Battistini noted that the luxury goods sector “generates 20-25% of sales on average in the US,” exports from Europe, and has little flexibility to shift production.
Europe, where many luxury goods giants such as LVMH (MC.PA), Kering (KER.PA), and Burberry (BRBY.L) manufacture their goods, was hit with a 20% tariff.
Battistini also called luxury giants’ pricing power into question, as even high-income consumers could start to pull back if high street fashion brands jack up prices to compensate for tariffs
JPMorgan’s research shows Ferragamo (SFER.VI) has already starting raising the prices of some of its handbags and ballet flats due to tariffs.
“The aspirational consumer is going to be in hibernation as the impact of February/March Challenger job cuts report planned layoffs start to hit,” Tematica Research chief investment officer Chris Versace told Sozzi.
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