It might be less than two weeks to Christmas, traditionally a time to splash the cash, but luxury stocks are still out of fashion.
That’s according to bankers at JP Morgan, who have warned investors to stay clear of the likes of Burberry, LVMH and Kering.
‘Too early to chase luxury, stick with sport,’ the investment bank told clients, just weeks after HSBC published a gloomy report warning that three years of stellar growth for the sector was coming to an end.
While analysts remain bullish over long-term prospects, they warned of little growth in 2024 due to economic uncertainty in China, Europe and the US, which is heading into its election year.
JP Morgan downgraded its rating on Burberry, sending the shares down 1.3 per cent, or 19.5p, to 1493.5p, amid concerns the fashion house will struggle in the short term as consumer appetite cools next year.
Dumped: Despite there being less than two weeks to Christmas Bankers at JP Morgan have warned investors to stay clear of luxury goods firms such as Burberry, LVMH and Kering
LVMH, the French owner of Louis Vutton, Dior and Fendi, and Gucci owner Kering were also in the firing line.
Kering fell 0.4 per cent, or €1.45, to €409 but LVMH inched up 0.1 per cent, or €0.9, to €734.5.
The FTSE 100 rose 0.08 per cent, or 5.67 points, to 7548.44 and the FTSE 250 was up 0.18 per cent, or 33.64 points, to 18,695.76.
Recession fears mounted in the UK after the economy unexpectedly shrunk in October.
Across the Atlantic, the US Fed kept interest rates at 5.5 per cent.
Back in London, B&M fell 6.3 per cent, or 37.6p, to 562.8p after one of the discount retailer’s top shareholders reduced its stake.
SSA Investments raised £162million by selling 27.8m shares but will still own around 3.4 per cent of B&M.
Stock Watch – Tandem
Tandem plunged after it warned its annual profits would get wiped out as customers cut back.
The Birmingham firm – which sells bikes, toys and swing sets – flagged up lower demand due to the cost of living crisis.
This year’s results are dependent on how many orders are shipped in December.
The group, which had expected to break even, is likely to make a loss of between £900,000 and £1.3million for 2023.
Shares tumbled 19.3 per cent, or 27.5p, to 115p.
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Aston Martin skidded off course amid concerns over the luxury car maker’s ability to smoothly roll out new sports cars.
The FTSE 250 firm is gearing up for the launch and ramp-up of various models.
But HSBC said it faces an ‘uphill task’ to earn back trust following recent issues with the delivery of its new DB12 sports car.
Analysts at the bank described the company as a ‘mixed bag with significant potential’ that ‘needs to rebuild confidence having struggled with delivering on promised targets’.
HSBC said that the luxury car maker is at risk of missing its forecasts for the year and downgraded its rating on the stock. Aston fell 8.9 per cent, or 20.4p, to 208.6p.
Extraction fan maker Volution was up 3.5 per cent, or 13.8p, to 412p after raising its annual forecasts following a strong start to its new financial year as revenue rose 8 per cent to £121million in the four months to the end of November.
Petra Diamonds is closing in on the sale of its mine in South Africa.
The group, which also digs for precious stones in Tanzania, has explored the possibility of winding the site down since April last year and will decommission it if the sale falls through.
Its shares rose by 1 per cent, or 0.5p, to 50.5p yesterday.
Government contractor Capita signed a ten-year contract worth £34million with Ireland’s National Transport Authority.
The group, which also runs the London congestion charge and collects the BBC licence fee, will supply customer contact and information services for commuters. It rose 3 per cent, or 0.6p, to 20.74p.
Chapel Down marched ahead after its founder Frazer Thompson, who led Britain’s biggest wine maker for two decades until September 2021, snapped up a 4 per cent stake, after it last week made its debut on AIM, having been previously listed on the Aquis Stock Exchange.
Shares surged 19.2 per cent, or 12.5p, to 77.5p.
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