Barclays' latest checks on luxury retail channels in Mainland China point to low-to-mid-single-digit sales growth in the first quarter, even as the bank underlines a marked dispersion in how individual brands are performing.
The investment bank reported that sentiment in China appears largely unchanged from its view six months ago. Barclays expects the overall Chinese luxury consumer cohort to shrink by about 2% in the first quarter, a decline it attributes in part to continued weakness in offshore spending, most notably in Japan.
Looking further ahead, Barclays projects a modest rebound in fiscal 2026. The firm forecasts the Chinese cohort to be roughly 1% higher in fiscal 2026, following an estimated 7% drop in fiscal 2025.
Among individual houses, Burberry (LON:BRBY) and Moncler (BIT:MONC) drew the most uniformly favorable feedback from Barclays' trip and are expected to deliver positive growth in China during the first quarter. Other names singled out as outperformers include Loro Piana, Brunello Cucinelli and Miu Miu, while Barclays notes that some brands continue to record double-digit declines in the market.
Barclays described sentiment at Dior as improving. By contrast, Gucci is seen as further from a recovery, with the brand still tracking double-digit declines in China.
In its positioning ahead of first-quarter results, Barclays retains overweight ratings on Richemont, Moncler and Burberry. The bank cites several potential upside factors for those names: Richemont's exposure to defensive jewellery, Moncler's relative outperformance in China, and the momentum behind Burberry's turnaround. Barclays also carries an overweight on Prada (BIT:1913), though it assigns a lower probability of a first-quarter beat for that name because of difficult comparisons for Miu Miu.
Barclays furthermore characterized China as increasingly showing the traits of a mature luxury market. Growth, the bank said, is becoming more contingent on market-share gains and the relative strength of brands rather than broad macro tailwinds. The report noted that foreign tourists are now contributing up to 10% of luxury sales in some malls, underscoring the role of cross-border spending in certain locations.
Despite pockets of strength and select upside risks among individual names, Barclays maintains a neutral stance on the luxury goods sector overall, pointing to a lack of clear catalysts that would drive a broad rebound across the industry.
Is CFR a bargain right now? Barclays pointed readers to valuation tools used to assess individual names, noting the availability of a Fair Value calculator that aggregates multiple industry valuation models for analysis.