Prada SpA

Goldman Sachs initiated coverage of 10 European luxury stocks, assigning Buy ratings to just four, as it argued that muted sector growth will not last and that 2027 will mark a turning point after three years of post-COVID normalization. Analysts led by Erwan Rambourg said the slowdown in sales has been driven less by macro headwinds than by aggressive pricing and a slower pace of innovation, both potentially linked to a degree of strategic inertia, noting that traditional luxury brands raised prices by about 60% between mid-2019 and mid-2026. Goldman forecasts organic sales growth for its coverage rising from 6% in 2026, on depressed 2024 and 2025 comparisons, to 7% in 2027, with the sector reverting to mid-single-digit growth, and expects U.S. outperformance to extend into 2027 and beyond, a mechanical rebound in the Middle East and stabilizing sales in China, while Europe stays muted apart from American tourist flows. The four Buy-rated stocks are Richemont, LVMH, Moncler and Prada, with price targets of CHF225, €500, €62 and HK$52 respectively. Goldman initiated Kering, Burberry and Brunello Cucinelli at Neutral and kept Zegna at Neutral, while starting Hermes and Swatch at Sell.

Capri Holdings has closed 41 retail locations over the past year, reducing its global store count to 871 as of June 27, 2026, from 912 a year earlier. The closures include 33 Michael Kors stores and eight Jimmy Choo locations, leaving Michael Kors with 662 stores and Jimmy Choo with 209. The move is part of a broader streamlining effort after the company sold Versace to Prada Group in December 2025 for €1.25 billion, and comes as Capri reported a 3.5% decline in first-quarter fiscal 2027 net revenue to $769 million, with Michael Kors revenue down 7.1% to $590 million while Jimmy Choo revenue rose 10.5% to $179 million. The company now expects full-year fiscal 2027 revenue of approximately $3.4 billion, below earlier forecasts, but maintained its earnings-per-share outlook of about $2.15. CEO John Idol expressed optimism, citing strategies to elevate brand desirability and improve customer experience across both remaining brands.

Prada, Michael Kors, and Alaïa recorded the strongest combined digital brand rankings among soft-luxury names in the second quarter, according to Bank of America's latest Brand Leading Indicator. The indicator ranks 43 soft-luxury brands based on social media followers, online searches, and website traffic, with momentum weighted at 60% and digital presence at 40%. Prada ranked first overall, followed by Michael Kors and Alaïa, while Michael Kors led three-month momentum after Google searches surged from a low base, lifting it from 33rd place in the first quarter. Prada and Alaïa were identified as the strongest brands in the first half of 2026, maintaining consistently high positions across both quarters. Chanel showed the biggest improvement late in the period, climbing from 10th in April to first in June as interest grew around Matthieu Blazy's collection, with Alaïa and Coach ranking second and third for June. Gucci's quarterly momentum ranking improved by 20 places to sixth, supported by stronger US website traffic, online searches, and promotional events, while Saint Laurent rose five positions to 16th, though fellow Kering brand Balenciaga dropped from 13th to 35th. Among LVMH brands, Loro Piana returned to the top 10 at seventh, Louis Vuitton climbed to 10th from 28th, and Dior finished 31st after Chinese search activity weakened. Swatch led hard luxury, helped by online interest surrounding its Royal Pop pocket watch collaboration with Audemars Piguet, with Jaeger-LeCoultre and Tissot placing second and third. Digital engagement across the soft-luxury sector increased 18% year over year, marking a fifth consecutive quarter of acceleration, as Google searches rose 47%, website traffic grew 39%, and Chinese Baidu activity remained down 18%. Excluding unusually strong Google search figures, overall online activity still improved by 7 percentage points from the first quarter, supporting expectations for continued luxury demand recovery led by the US and South Korea.

Capri Holdings' turnaround is showing signs of progress after the company sold its Versace brand to Prada for $1.375 billion, returned to profitability, and strengthened its balance sheet through debt reduction and positive free cash flow. In its fiscal 2026 fourth quarter, Capri reported earnings of 22 cents per share, a sharp improvement from a loss of $4.90 per share a year earlier, while revenue from continuing operations, which excludes Versace, totaled $796 million, down 3.7% year over year. The company expects revenue growth to return in fiscal 2027, with earnings per share projected to rise 40% to $2.15, as Michael Kors improves profitability and Jimmy Choo returns to the black. Despite these improvements, Capri shares remain down roughly 65% from the highs reached after the Tapestry merger announcement and trade at a substantial discount to peers such as Tapestry and Ralph Lauren, with a price-to-sales ratio of 0.6 compared to 4.3 and 3.0, respectively. Wall Street maintains a consensus Hold rating on the stock, with an average 12-month price target of $24.79, implying roughly 30% upside from current levels.