Asian luxury demand and the AI wealth effect may drive upside in 2Q26E earnings

Overview

The report tracks the impact of the so-called AI wealth effect on global luxury demand in 2Q26E. Bernstein combines alternative sales data from luxury shopping malls in Mainland China with retail data from Hong Kong, South Korea, Japan, and France to assess the earnings elasticity of major luxury companies and business segments. The conclusion is that momentum in major Asian markets remains strong, especially in South Korea, Hong Kong, and Japan; hard luxury continues to outperform soft luxury, and these trends may be reflected in the upcoming earnings releases.

Core views

The core views include: first, driven by improvement in South Korea, Hong Kong, and Japan, LVMH F&LG 2Q26 OSG could reach as high as +3%, above the current consensus of +1.7%; second, supported by jewelry momentum in Japan, Richemont group 1Q27 OSG is forecast at +12.1%, with its JM business OSG around 15%, about 200bps above consensus; third, Moncler brand APAC growth may see weakness in Mainland China offset by South Korea and Japan, with 2Q26 brand CFx growth forecast at +5.6%, above company-collected consensus of +4.1%; fourth, Gucci may improve sequentially but remain broadly in line with consensus, with 2Q26 OSG around -6%.

Analysis framework

The report uses a top-down approach combined with regression analysis: it first observes high-frequency regional retail indicators and alternative data, then runs correlation regressions between these indicators and the historical disclosed regional revenue or OSG of LVMH F&LG, Richemont, Gucci, and Moncler, and finally derives group- or segment-level forecasts based on regional revenue weights or simple averages, comparing them with company-collected or Visible Alpha consensus expectations.

Methodology notes

• Alternative dataRegional retail indicators and shopping mall sales tracking

  Uses Chinese shopping mall luxury sales, foreign luxury brand sales in South Korean department stores, Hong Kong retail, Tokyo department store data in Japan, and French retail data to characterize demand momentum.

  These data are used to assess regional sales trends in 2Q26E ahead of time, with particular focus on hard luxury, jewelry, watches, leather goods, apparel, and accessories.

• Statistical modelingHistorical correlation regression

  Regresses regional retail indicators against regional growth rates disclosed by companies and uses R2 to assess explanatory power.

  The report states that LVMH F&LG correlation R2 is 65%-97%, Richemont 70%-85%, Gucci 60%-95%, and Moncler brand 93%, and therefore uses the regression-implied values to derive short-term earnings forecasts.

• Forecast synthesisRegional weight-weighted model

  Combines regional regression forecasts with consensus expectations for regions lacking reliable correlations, weighted by historical revenue mix.

  Richemont, Gucci, and Moncler mainly use weighted regional forecast values; because LVMH F&LG only discloses half-year regional performance, the report first forecasts 1H26E revenue, then subtracts 1Q26 revenue, while considering an approximately -3 percentage point mark-to-market FX impact in 2Q26.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Richemont

  One of the biggest beneficiaries

  Strengths

  Strong jewelry momentum in Japan, sustained consumer preference for jewelry and watches, and structural advantages in improved governance and consumption segmentation remain underestimated.

  Weaknesses

  Some regions such as the Americas and MEA lack reliable regression indicators and require supplementation from consensus expectations.

  Comparison

  Relative to LVMH F&LG, the market expects the growth gap between JM and F&LG to narrow, but the report believes Richemont still has upside surprise potential.

  Risks

  If Japan's tourist mix, the wealth effect, or jewelry demand weakens, the forecast upside may fail to materialize.

• LVMH Fashion & Leather Goods

  Potential upside beneficiary

  Strengths

  South Korea and Hong Kong remain strong, Japan is improving due to a low base, weak yen, and regional wealth creation, while Dior's recovery and cost efficiency provide self-help improvement.

  Weaknesses

  Regression forecast errors for F&LG may be larger when expectations are low, and the market remains concerned about the W&S transition and family succession process.

  Comparison

  2Q26 OSG is forecast at up to +3%, above the +1.7% consensus expectation, but the magnitude of upside is lower than the implied beat for Richemont JM.

  Risks

  Insufficient French data, an approximately -3 percentage point negative FX impact, and the possibility of historical correlations breaking down.

• Moncler brand

  Beneficiary of improving regional mix

  Strengths

  Strength in South Korea and improving apparel trends in Japan may offset relative weakness in Mainland China, while APAC proxy indicators point to +13% growth.

  Weaknesses

  Mainland China trends remain soft, and assumptions for regions outside APAC still rely on consensus expectations.

  Comparison

  2Q26 CFx growth is forecast at +5.6%, above company-collected consensus of +4.1%.

  Risks

  If improvements in South Korea or Japan are insufficient, or if EMEA and the U.S. perform below assumptions, brand growth may come in below the model forecast.

• Gucci

  Broadly in line with expectations

  Strengths

  Improving accessories sales trends in Japan, with a low base supporting Japan OSG of around +4%.

  Weaknesses

  The U.S. and APAC ex. JP are expected to be only stable sequentially, leaving overall 2Q26 OSG still around -6%.

  Comparison

  Relative to LVMH, Richemont, and Moncler, Gucci lacks clear positive surprise signals.

  Risks

  Company-collected consensus expectations have not yet been obtained, and the pace of brand recovery may continue to weigh on overall performance.

Key data

• Sales of foreign luxury brands in South Korea35%-40% year-over-year growth in April and May 2026A further acceleration from 20%-30% in 1Q26.
• Luxury sales in Mainland China+7% year-over-year in April and May 2026Showing signs of improvement from flat in 1Q26.
• LVMH F&LG 2Q26 OSG forecastUp to +3%Above the current consensus expectation of +1.7%.
• Richemont group 1Q27 OSG forecast+12.1%About 110bps above company-collected consensus; JM business implied at around 15%, about 200bps above consensus.
• Moncler brand 2Q26 CFx growth forecast+5.6%Above company-collected consensus of +4.1%, with APAC CFx proxy growth at +13%.
• Gucci 2Q26 OSG forecastAbout -6%Broadly in line with Visible Alpha consensus expectations.
• Global luxury sector valuationAbout 20% cheaper than its 10-year historyIf 1H26E earnings improve, it may become a catalyst for capital to refocus on the sector.

Impact & implications

The investment implication is positive: if strong Asian demand and AI-related wealth creation continue to feed through to luxury consumption, 1H26E earnings may become an inflection point for the sector. The report recommends prioritizing high-quality and self-help improvement names, with Richemont as the top pick; LVMH combines high quality with self-help recovery attributes; Burberry and Ferragamo are viewed as turnaround opportunities. At the same time, it is harder to be positive on Hermès in the short term, but if it returns to high-single-digit growth, the market may tolerate one or two weak quarters.

Risks

• Although the regressions show high historical correlation, forecast values still contain errors; when market expectations are low, such errors may have a greater impact on the conclusions.
• Except for French retail data, most data are updated only through May 2026, so June trends must be assumed or inferred from footfall regressions.
• Hong Kong assumes that April and May trends continue into June; if June weakens, the forecast may be overly optimistic.
• France only has data for April 2026, and the Middle East conflict adds further uncertainty.
• China's alternative data cover multiple types of shopping malls, but exclude Hang Lung malls such as Shanghai Plaza 66, which may affect representativeness.
• If the AI wealth effect, tourist inflows from South Korea and Taiwan, the weak yen, or preference for hard luxury weaken, the upside momentum in Asia may not be sustained.

What to watch

• Whether LVMH F&LG 2Q26 OSG approaches or exceeds +3%.
• Whether Richemont JM business OSG reaches around 15%, and whether demand for jewelry and watches in Japan continues to exceed expectations.
• Whether sales of foreign luxury brands in South Korean department stores maintain the 35%-40% growth range in June and subsequent months.
• Whether Tokyo department store sales of jewelry, accessories, and apparel, together with preliminary footfall indicators, continue to validate the regression forecasts.
• Whether the improvement in luxury sales in Mainland China extends from April and May through the full 2Q26.
• After the release of 1H26E earnings, whether long-term capital reallocates to global luxury goods due to low sector valuations and improving growth.