Luxury Goods China taking stock

Luxury Goods China: taking stock

Feedback from BofA China fieldtrip 18 September 2026

Last week we hosted a virtual fieldtrip focused on Chinese consumption of Luxury, Equity Beauty and Sporting Goods with local companies and experts. For an overview of the key Europe feedback from all meetings, see Exhibit 1. Alongside this note, we lower our numbers for Luxury Goods Chinese luxury demand in 2H26 and 2027 given limited evidence of green shoots in the Ashley Wallace >> market for now. We now forecast global luxury growth of 4% cFX in 2027 (3% for soft Research Analyst Merrill Lynch (Australia) luxury and 6% for hard luxury). See Exhibit 8 for changes at the company level. Luxury: tough summer, but less bad in recent weeks Daria Nasledysheva >> Research Analyst The Chinese consumer represents 29% of luxury sector revenue. Pre-Covid, Chinese MLI (UK) luxury demand grew +13% on a 10yr CAGR basis. More recently, we estimate Chinese spend was flat in 2024, -6% in 2025 and +1% in 1H26. Summer trends deteriorated, Ioanna Ziarti >> particularly in July and the start of August, with traffic negatively impacted by weather Research Analyst disruption, tax policy changes and a tougher comp. However, there was some recovery MLI (UK) (less bad trends) in the second half of August and start of September. From a category perspective, feedback suggests that hard luxury (watches & jewellery, particularly Thierry Cota >> international brands) outperform soft luxury (where trends remain highly polarised by Research Analyst BofASE (France) brand). Regionally, HK has outperformed Mainland China with strong visitations (+11% Joffrey Bellicha Meller >> YTD) and a more attractive RMB/HKD boosting tourism (Exhibit 67). Industry data on Research Analyst MLI (UK) Chinese consumption has also been muted: retail sales in 3QTD is +0.5% (+0.2% in 2Q), jewellery sales -14% in 3QTD (-12% in 2Q) and Macau GGR -5% in 3QTD (vs 2Q flat). Giulia D'Ambrosio >> Research Analyst MLI (UK) Limited green shoots for a V or U shaped recovery Whilst we believe there was some component of the weak 3Q Chinese demand that may be temporary (ie floods and weather), we also believe that its prudent to expect more muted growth in 2H26 and 2027 in light of broader consumer weakness, no positive wealth effect from property/stock market, coupled with recent fiscal changes impacting high-net-worth sentiment, albeit part of broader fiscal tightening, see Exhibit 92. We now expect Chinese luxury demand +1% cFX in 2027, see Exhibit 4.

Sports: still no green shoots Considering the tough consumption backdrop already outlined above, Chinese sports demand also remains challenged. Product newness is not compensating, and running is now outperforming less than before. Nike cutting back its online business with retailers from 2027 should lower promotional activity, but not in the short term.

We also lower our Price Objectives for Brunello Cucinelli (to €95 from €100) and Prada (to HK$43 from HK$44) based on our estimate changes. See pages 6-9 for details.

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Contents BofA China Fieldtrip feedback 3 We make changes to our assumptions 6 3Q26 luxury sector growth to slow 270bps vs 2Q 6 What does it mean for 2027? 6 How important is China for Luxury Goods? 12 Chinese consumer = 29% of sector revenues 12 China revenue exposure by company 13 Hong Kong is capturing part of Chinese luxury spend 15 Watches – slow declines with brand polarisation 17 3Q26TD Greater China watch market…