Luxury Brands Equity: Outlook 2026
December 2025 | Flavio Cereda
After the exceptional highs of 2021-2023 and the subsequent troughs of 2024-2025, the key question for 2026 is: Will this be the year that demand for luxury goods finally normalises?
Momentum is running behind expectations due to the self-induced volatility of Q2 2025, particularly the uncertainty and concerns surrounding the whole US-led tariff debate. In a more stable environment, we believe we would have seen growth normalise by now. Current metrics and datapoints we follow appear to validate our thesis that the trend reversal is starting to materialise into 2026, further supported by easy comparables.
It will take time, but in the absence of further macro shocks, we would expect a gradual but sustained reversal in trend coming.
Prepare for the unexpected, always
The strong and supportive news flow of the first quarter was quickly shaken by the manner and form of a sudden volatility, with nowhere to hide in the space. The only relative shelter was a handful of more defensive names, largely due to the resilience of their particular customer cohort.
We anticipate less turbulence next year, with performance driven more by operational dynamics. Valuations are expected to reflect this, more than abstract expectations.
Opportunities in 2026
Our current assumptions look for a significant uptick in 2026, paving the way back to a full normalisation of organic growth trends by 2027. This outlook assumes continued momentum from the Chinese consumer cluster – a recovery we have been tracking since early 2025 – and a resilient US cluster, notwithstanding inevitable post-tariff price increases. Under this assumption, we expect to see less negativity associated with the luxury space, with broader upside potential across the space. Our focus will be on identifying and engaging with the strongest momentum stories within the sector and its broader ecosystem.
Flavio Cereda is an Investment Director investing in Luxury Brands Equity strategies at GAM Investments.