Why Luxury Goods Companies’ Revenues Are Forecast to Climb

Luxury-goods companies are entering a recovery phase because sales momentum should improve as pricing, innovation and US demand become more supportive.

• Goldman Sachs Research forecasts 7% revenue growth for its basket of large publicly traded luxury companies in 2027, up from 6% in 2026.
• Luxury stocks have underperformed for three or four years, while earnings estimates also declined, leaving valuations neither particularly attractive nor stretched; the key catalyst should be sales momentum rather than valuation.
• The slowdown reflected China’s property slump, 2025 US tariffs, higher rates and geopolitical tensions, but Goldman Sachs attributes the main weakness to strategic inertia, excessive price increases and limited post-Covid innovation.
• Luxury prices rose by around 60% between mid-2019 and mid-2026, allowing more affordable brands to gain share as consumers found traditional high-end offerings less compelling.
• US luxury demand has strengthened since the pandemic and store openings are multiplying, while South Korean demand looks fragile and Hong Kong is showing signs of recovery.
• The report’s seven growth drivers are clout, categories, consumer caliber, creativity, consistency, codes and icons, and corporate considerations; jewelry is viewed as structurally more promising than beauty.

Takeaway: Investors should focus on improving sales momentum and the durability of each brand’s growth drivers, while recognizing that the recovery depends on consumers responding to new creative leadership and collections over the next three to four seasons.