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Luxury Takes a Beating (close levels)

CONSUMER CYCLICALS

Reminder Burberry missed mainly on Americas and EMEA sales but has been facing brand specific issues for some time. Swatch (watches) missed on China weakness and guided for the region to remain weak for rest of the year and dragged everyone down with it when it said weakness for the "entire luxury goods industry".


Vol will be here to stay, Richemont 1Q results tomorrow morning. As always local credit has a low beta to it but we do think Kering bondholders are ignoring Gucci issues - the credit impact of it will depend on how aggressively it maintains equity payouts.



  • Burberry -16% (Baa2/NR); £30s +14
  • Kering: -5% (NR/A-); unch to +2 (€/£)
  • Richemont: -4% (NR/A+); unch to +3 (€)
  • LVMH: -3% (AA-/Aa3); unch to +1 (€/£)
  • Swatch; -10% (not credit issuer)

Has had limited read-through to lux-beauty;
  • Loreal; -2% (Aa1/AA); unch to +1 (€)
  • Coty; unch (Ba2 P/BB+ P/BBB-S); unch (€)
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Credit BulletsBulletHomepagemarkets-real-timeCredit

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