J.P. Morgan has placed Richemont on Positive Catalyst Watch ahead of the luxury group's FY26 earnings due on May 22, citing expectations for "strong brand momentum" within the jewellery segment and signs of better operational execution, the bank said in a note issued on Thursday.
The brokerage highlighted the stock's roughly 12% decline so far this year as a particularly compelling moment to re-examine the position, and said the imminent results should help verify projections of double-digit growth at Richemont's jewellery maisons - a rise the note estimates at 11% year-on-year.
Looking beyond Richemont, J.P. Morgan outlined expectations for the broader European luxury complex in the first quarter of 2026. Organic growth across the sector is forecast to run at around 3% year-on-year, down from 5% in the fourth quarter, with retail sales on a standalone basis seen rising about 6% and at 3% when wholesale is included.
The brokerage warned that performance is likely to remain uneven across brands and categories. Those with significant exposure to jewellery and high-end ready-to-wear are expected to outperform, while fashion and leather goods businesses - including segments within LVMH and Kering - are projected to stay in negative territory.
J.P. Morgan provided company-level retail sales expectations for the quarter. Brunello Cucinelli is forecast to post retail sales growth of 15%, Zegna 11% in retail sales, and Moncler's core brand 9% growth in retail. Richemont's Jewellery Maisons are projected to deliver 11% year-on-year growth in retail sales. By contrast, Hugo Boss is expected to show an 8% decline in sales, and Pandora is seen as broadly flat overall, with like-for-like sales down about 1.6%.
The note said it expects the first quarter to largely confirm ongoing trends for most brands, but added that geopolitical disruption in the Middle East is contributing to widening divergence in performance among luxury houses. Regional patterns are described as continued strength in U.S. discretionary spending, steady demand in Europe and Asia, and disruptions in the Middle East affecting both local consumption and travel-related flows.
Category-level traction is expected to vary. Jewellery is identified as remaining resilient, with Richemont and its peers benefiting from that exposure and from global demand. Leather goods, by contrast, are characterized as facing bumpier conditions as some labels work to rebuild product momentum.
Despite the anticipated strength in jewellery sales, J.P. Morgan expects margin headwinds at Richemont. The brokerage forecasts second-half FY26 EBIT margin to decline by 110 basis points year-on-year, a deterioration it expects to also see at Pandora and Hugo Boss, whereas Burberry is projected to experience margin improvement.
In addition, the note draws attention to shifts in creative direction across several major fashion houses. It suggests that accelerating product launch calendars could trigger market share re-allocation in a segment where overall volume growth is limited.
Separately, an AI-driven stock idea service described in the note evaluates CFR alongside thousands of companies using a broad set of financial metrics - more than 100 in its process. The note mentioned the service has previously flagged notable winners, including Super Micro Computer with a cited gain of 185% and AppLovin with a cited gain of 157%.
Summary
J.P. Morgan's Positive Catalyst Watch on Richemont ahead of FY26 results highlights anticipated double-digit growth in the jewellery segment and potential operational improvements, even as the stock has fallen around 12% year-to-date. The bank expects sector-wide first-quarter organic growth to slow to roughly 3% year-on-year, with retail sales growth uneven across brands and categories. Richemont faces expected margin pressure in the second half of FY26, despite resilient jewellery demand.
Key points
- J.P. Morgan has placed Richemont on Positive Catalyst Watch prior to FY26 results on May 22, citing strong jewellery momentum and improved operational execution.
- Richemont's stock has declined about 12% year-to-date; J.P. Morgan projects its Jewellery Maisons will deliver roughly 11% year-on-year retail sales growth.
- European luxury Q1 2026 organic growth is estimated at about 3% year-on-year, with retail sales rising 6% excluding wholesale - performance is expected to be uneven across categories and regions.
Risks and uncertainties
- Margin pressure - J.P. Morgan expects Richemont's second-half FY26 EBIT margin to fall by 110 basis points year-on-year, which could weigh on profitability.
- Geopolitical disruption - instability in the Middle East is cited as contributing to divergent brand performance by affecting local demand and travel flows.
- Category divergence - leather goods are described as facing "bumpier" trends while jewellery remains resilient, creating uneven outcomes across the luxury sector.