HSBC issued an upbeat report Monday on the luxury sector, predicting midsingle-digit growth this year on average for several of the world’s leading brands and corporations.

Seven of the eight luxury firms covered by HSBC — LVMH Moët Hennessy Louis Vuitton, Richemont, Burberry, Prada, Moncler, Hermès and Kering — have been assigned buy ratings. The report was issued March 9, however, before the war in Iran escalated with major macroeconomic impacts.

HSBC, one of the world’s largest banking and financial services organizations, based its outlook on a variety of factors, most notably that luxury firms were addressing self-inflicted issues such as insufficient creativity and “greedflation,” meaning raising prices beyond what would have been required to meet rising costs. Also, luxury firms experienced a revolving door of chief executive officers and creative directors over the past year, and should be settling in this year.

Additionally, HSBC based its positive outlook on retail expansions underway by certain luxury groups and brands, and visits to stores in different parts of the world suggesting positive traffic trends.

“After very weak sales in 2024 and 2025, we see sales rebounding this year for the sector,” HSBC indicated in its report. “Short term, the later timing of Chinese New Year is a positive — as sector comments in January 2026 were on a tough base and comments to come should be rosier. Separately, the post-election bump, which saw luxury demand strong in the U.S. from November 2024 to mid-February 2025, should now stop weighing.

“On the negative side, the Middle East, one of the rare silver linings for luxury demand over the past few years on strong local demand, tourism flows and inbound flows of wealthy individuals could be under pressure short term.”

The war against Iran has disrupted trade and travel in the Mideast and spiked oil prices. The war is in its third week. There is no certainty on how long it will last or on its short- or long-term impact on the world economy.

Nevertheless, HSBC expressed a belief that macro events “aren’t as hurtful as some investors think. Most markets will be improving this year with the U.S. the strongest contributor to growth.”

HSBC said it recently conducted store tours in New York, Dubai, London and Milan where officials observed “a significant rebound in enthusiasm for the sector mostly on the back of more reasonable pricing and the multiplication of product initiatives as well. Brands at different price points, which were significantly challenged such as Burberry and Dior, are seemingly doing much better. Hopefully if merchandising teams can get things right, Gucci could be the next to follow in the second half. Interestingly, the sector last summer was supported by the market giving it the benefit of the doubt. Ironically, now that we see evidence of a pick-up, the sector has been somewhat abandoned again. We think this provides an investment opportunity.”

On LVMH, the bank maintained a buy rating and indicated, “We like the stock for the visible acceleration of sales growth we expect to see, notably in its key fashion and leather goods division, thanks in part to the comeback of Dior. We also believe that cost discipline and the potential for portfolio pruning can help. Our slight increase of estimates is linked to stronger growth for the fashion division this year. Bear cases remain mostly on valuation and succession planning.” HSBC raised its target price to 705 euros, up from 700.

On Richemont, which has a buy rating and includes Cartier and Van Cleef & Arpels, the bank sees plus 11 percent growth for the next few quarters, strong management of selling, general and administrative expenses, and renewed management as positives, though the price of gold will impact gross margin, resulting in some reduced earnings. HSBC brought its target price down to 190 Swiss francs from 220.

The repositioning of Burberry “has started to deliver. We don’t think this is the end of the story just yet as operating leverage should kick in over the next two years,” HSBC reported. “After the group reports fiscal year 2026 results, catalysts might lack though as the first half ending September does not generate much profit historically.” HSBC left its target price unchanged at 1,525 pence. The bank also maintained its buy rating on Burberry.

On Prada, HSBC reported, “The value stock in our coverage likely continues to be hit by limited liquidity, being listed in Hong Kong, misplaced concerns on the Versace acquisition, fears of a Miu Miu steep slowdown and management exodus. Shares are compellingly cheap still to us even if we cut estimates on slower growth.” HSBC has a buy rating on Prada but reduced its target price to 59 Hong Kong dollars from 65.

On Moncler, “The group has a convincing plan for growth and a thoughtful management structure for the long term. Besides, caution on China and fear of substitutes have been clearly misplaced. We expect the group’s eponymous brand to grow at the fastest rate in the industry — plus 10 percent.” The bank upgraded Moncler to buy from hold, and set a target price of a street-high 72 euros, up from 60 euros.

Hermès is viewed as another double-digit growth achiever, with sales growth “likely going to end up being stronger than what we previously anticipated….[First quarter] 2025 having been artificially soft in sales on low inventories, we believe the group should start 2026 on a high note.” Hermès was also upgraded to buy from hold, with a target price 2,350 euros, up from 2,250.

Regarding Kering, HSBC wrote, “We are certainly not hanging our hat on explosive growth at Gucci this year as a sizable comeback might take a few quarters but given the rest of the portfolio seems to have better prospects and given the amount of short-term catalysts we see for the stock, we are upgrading shares from hold to buy despite more muted upside than other buy-rated stocks.” The bank upgraded Kering to buy from hold, but lowered its target price to 310 euros, from 340.

Swatch was upgraded to hold from reduce, with a target price of 170 Swiss francs up from 120 Swiss francs. “Following a positive sales inflection in [fourth quarter] 2025 and a more constructive attitude of management on the results call, we believe that for once in a long time, improvement might be coming,” HSBC reported. “Unfortunately, the very depressed starting point in terms of margins should imply the group will continue to deliver subpar metrics. We upgrade shares to hold on a rosier top-line scenario leading to greater operating leverage from that low base.”

The HSBC report stated, “The reboot is about to deliver for the sector. America first, but also China and other parts of Asia should enable our stocks under coverage to grow sales midsingle digit on average.” The research report was written by Erwan Rambourg, Anne-Laure Bismuth and Akshay Gupta.