European luxury Q2/H1 2026 outlook: demand improving but dispersion widening, Brunello Cucinelli added to the positive catalyst watchlist

Overview

This report is JPMorgan’s pre-earnings-season outlook for European luxury entering Q2/H1 2026. The authors argue that the industry overall is not in full recovery, but in a phase of "modest improvement with high dispersion": U.S. affluent and upper-middle-income consumers remain resilient, South Korea and Japan remain strong, and European travel spending shows signs of recovery; however, China demand is still unstable, recovery in leather goods and other soft-luxury categories is slower, and Middle East-related disruption lasts longer in Q2. As a result, the investment thesis is not to buy the whole sector, but to continue favoring winners with stronger brand momentum, better category mix, and stronger execution.

Core views

The core view is that Q2 sector sales may be broadly flat with or slightly better than Q1, but differences between brands and categories continue to widen. Jewelry, premium ready-to-wear, and companies with strong brand momentum are more likely to outperform, while leather goods and brands focused on aspirational consumers remain weaker. JPMorgan expects Richemont to start earnings season with relatively good performance, and also expects Zegna and Brunello Cucinelli to deliver solid results; Brunello Cucinelli, despite stock underperformance year-to-date, has still healthy fundamentals and is placed on Positive Catalyst Watch. Conversely, positions in major leather-related companies such as LVMH, Kering, and Hermes are already relatively light and may provide some floor support, but a subdued Q2 trend and limited upside revision potential for H2/next-year consensus also temporarily cap upside.

Analysis framework

The report combines company earnings previews, a comparison of JPMorgan forecasts versus consensus expectations, brand heat tracking, Google Trends, SimilarWeb traffic data, U.S. Chase card spending, retail sales in key countries, Japanese department-store data, South Korean travel and retail data, China retail and handbag import data, and price tracking to assess the Q2/H1 earnings season and H2 risk-return profile.

Methodology notes

• alternative_dataBrand Heatmap

  Monitoring brand heat and consumer engagement

  Brand momentum and consumer interest changes are inferred from indicators such as Google Trends, brand-website visits, and site dwell time. The report updates this heatmap through the end of June.

• consumer_spendingChase card spending data

  U.S. credit card spending tracking

  It uses Chase card data to observe changes in U.S. spending across categories, income brackets, and age groups, serving as high-frequency evidence for the resilience of luxury demand.

• macro_industry_dataRetail sales and department store tracking

  Tracking key-market retail and department-store sales

  The report tracks luxury department stores in Japan, South Korean retail and visitor flows, China retail sales, and handbag imports to gauge regional demand strength.

• market_expectationsJPM estimates vs consensus

  Forecast gaps and risk-return assessment

  By comparing JPMorgan estimates with consensus forecasts, the report identifies which companies face revision risk up or down and recommends continuing to hold winners accordingly.

• pricingPricing Tracker

  Core luxury pricing track

  The report tracks prices of roughly 150 flagship products across France, China, the United Kingdom, the United States, Japan, the Middle East, and South Korea to evaluate pricing power and the inflation environment.

Asset mapping & comparison

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

• Brunello Cucinelli

  Key positive catalyst candidate

  Strengths

  The outlook for Q2 sales and H1 EBIT is healthy; online momentum is strong, with clear improvement in Google Trends, website visits, and site dwell time. Its premium positioning and brand momentum are prominent.

  Weaknesses

  Q2 may decelerate versus Q1, and Middle East impact is significant; year-to-date stock underperformance reflects limited market confidence.

  Comparison

  Compared with most soft-luxury and leather companies, Brunello Cucinelli is more notable for stable growth and margin improvement.

  Risks

  If H1 results fail to prove revenue and earnings resilience, the Positive Catalyst Watch may not translate into stock-side catalyst behavior.

• Richemont

  Positive selective winner

  Strengths

  Richemont's Jewellery Maisons are expected to deliver around +14% growth in Q2; Cartier has strong online momentum, with improvements in website visits, dwell time, and Google Trends.

  Weaknesses

  Van Cleef's online trend is relatively softer, and a strong comparable base in Q3 may be harder to beat.

  Comparison

  The jewelry segment is overall stronger than leather goods, and Richemont is more resilient than most soft-luxury companies.

  Risks

  Volatility in China demand, a high base, and prior stock outperformance year-to-date could limit incremental upside.

• Zegna Group

  Positive selective winner

  Strengths

  Zegna and Thom Browne show strong online trends; JPMorgan expects retail sales around +14%, and Zegna is seen as resilient even against a higher comparable base.

  Weaknesses

  Some strong online metrics may roll over from very high levels.

  Comparison

  Compared with the industry’s roughly +4% sales growth, Zegna is expected to outperform significantly.

  Risks

  If high-end menswear or travel demand slows, growth durability would be tested.

• Prada Group

  Selectively positive

  Strengths

  Prada’s online trend has improved clearly, and Miu Miu remains strong. Expectations have been reset due to Versace dilution and Miu Miu normalisation.

  Weaknesses

  Miu Miu faces a high base, and Versace site traffic remains negative on a two-year basis.

  Comparison

  Compared with Burberry and Kering, Prada’s brand improvement is clearer and its valuation is increasingly seen as attractive.

  Risks

  Miu Miu normalisation, Versace integration dilution, and weak China demand may keep earnings expectations under pressure.

• Moncler

  H2 preferred name but softer Q2 brand trend

  Strengths

  The H2 comparable base is more favorable on a two-year basis, and Stone Island’s online trend has improved clearly.

  Weaknesses

  Moncler website visits slipped slightly in Q2; as European travel recovery relies more on Asian visitors, it may benefit less than brands driven by U.S. and Middle East visitors.

  Comparison

  Short-term Q2 performance is not as strong as Brunello Cucinelli, Zegna, and Richemont, but the H2 setup is considered more attractive.

  Risks

  Seasonality, weak Asian tourist demand, and declining brand website visits could cause short-term results to miss expectations.

• LVMH Fashion & Leather Goods

  Neutral to cautious

  Strengths

  Positioning is already relatively light, which may offer some valuation floor support; Dior’s online trend improved after designer changes and new product launches.

  Weaknesses

  JPMorgan expects Q2 F&LG at only about +1% ex-FX, and leather goods trends remain choppy.

  Comparison

  Compared with jewelry and premium ready-to-wear, growth elasticity in leather goods-related businesses is weaker.

  Risks

  Limited upside revision scope in H2 and next-year consensus, plus a continued subdued Q2 trend, could constrain upside.

• Kering / Gucci

  Cautious

  Strengths

  Gucci and other F&LG brands saw improving QoQ trends in Q2; Bottega Veneta and Balenciaga also showed some improvement.

  Weaknesses

  Improvements are less pronounced than for stronger momentum brands and have come on a low base; Gucci’s website activity remains negative on a two-year basis.

  Comparison

  Compared with Richemont, Zegna, and Brunello Cucinelli, Kering remains a soft-luxury name with higher expectation revision risk.

  Risks

  Slower Gucci recovery progress, weak leather goods demand, and volatile China demand may continue to weigh on valuation.

• Burberry

  Negative risk name

  Strengths

  Website traffic improved modestly from a low base and Google Trends has rebounded.

  Weaknesses

  Improvements in traffic and dwell time are not strong, and the two-year trend remains negative.

  Comparison

  The report places Burberry with Kering as one of the softer names in soft-luxury with higher downside risk.

  Risks

  Weak brand momentum, weak aspirational consumers, and softer European demand could keep earnings under pressure.

Key data

• Expected Q2 industry sales growthabout +4% yoyJPMorgan expects Q2 luxury-sector average sales growth to be broadly in line with the Q1 industry average of +4%.
• Expected Q2 retail growth+6% ex-FXRetail growth is expected to be around +6% after removing FX.
• Brunello Cucinelli Q2 sales outlook+10% ex-FXJPMorgan expects H1 results to reassure the market that both revenue and profits are developing healthily.
• Brunello Cucinelli H1 EBIT outlook+11%The report also expects H1 margin improvement of about +30 bps.
• Brunello Cucinelli stock performanceabout -20% YTDThe stock lag is a key reason it was placed on the Positive Catalyst Watch.
• U.S. Chase card Q2 total spending+5.3% yoyHigher than Q1 average +4.0%, indicating continued improvement in U.S. consumption.
• U.S. Chase card Q2 jewelry store spending+10.4% yoyJewelry remains one of the strongest-performing consumption categories.
• Japan top-four luxury department stores Q2 sales+7% yoyAccelerated versus Q1 +3%; duty-free sales averaged around +20% in Q2.
• South Korea luxury retail Apr-Mayabout +38% yoyA further acceleration versus Q1 around +25%, driven by both local wealth effects and travel-related spending.
• China May retail sales-0.6% yoyFirst negative growth since December 2022; gold and silver jewelry in Apr-May fell to -15%, indicating continued weakness in China demand.

Impact & implications

The investment implication is that the luxury segment should not be traded as if the sector is in full recovery. Selection should instead be guided by brand momentum, category mix, and execution. In the near term, Brunello Cucinelli, Richemont, Zegna, selected Prada Group names, and Moncler are favored in the H2 setup, while Kering, Burberry, Hugo Boss, and selected leather/soft-luxury companies still face risks of downward revisions or weak demand. At the macro level, U.S., South Korea, Japan, and European travel consumption can provide support, but China volatility and FX pressure constrain the scope for margin and valuation repricing in the sector.

Risks

• Chinese consumer demand remains volatile, with May retail turning negative, and gold/silver jewelry and handbag import data also weakening.
• The overall comparable base in Q3 is becoming tougher, especially for some companies facing higher hurdles on a year-on-year basis.
• FX remains a headwind to H1 margins, although its impact may weaken in the second half of Q2.
• Leather goods and soft-luxury demand remains uneven, potentially limiting upside for leather-related companies such as LVMH, Kering, and Hermes.
• The Middle East impact appears to persist longer in Q2 than in Q1, which could suppress growth for some brands.
• Google Trends and website traffic data are subject to monthly noise and AI search behavior distortions and cannot be treated as standalone fundamental evidence.
• If spending by U.S. high-income consumers, the South Korean wealth effect, or Japanese travel demand slows, the current winner framework may weaken.

What to watch

• Whether Brunello Cucinelli’s July 30 H1 report validates its projected Q2 sales of +10% ex-FX and H1 EBIT +11%.
• How Richemont begins its reporting season, especially momentum in Jewellery Maisons and Cartier.
• Whether Zegna, Prada, Ferragamo, and Swatch continue to show self-driven improvement and brand heat.
• The extent of improvement in Q2 and H2 guidance for LVMH F&LG, Kering/Gucci, and non-leather segments at Hermes.
• Whether consumption on U.S. Chase cards in jewelry, apparel, and high-income cohorts continues to improve.
• Whether Japanese duty-free department-store sales, South Korean luxury retail, and visitor inflows remain strong.
• Whether China retail sales, gold/silver jewelry, apparel, and handbag imports recover from Apr-May weakness.
• Whether brands beyond Cartier, Bulgari, and Bottega Veneta resume broader price-markup capability in the price tracker.