Antonio Vitale: In the Era of Low Global Luxury Growth, Milan Market Breeds New Main Themes for Excess Returns

Antonio Vitale: In the Era of Low Global Luxury Growth, Milan Market Breeds New Main Themes for Excess Returns

The latest semi-annual report released by Bain for Altagamma has sounded an alarm for the domestic luxury sector: in 2025, global sales of high-end apparel, footwear, and handbags are expected to decline by 2% year-over-year, marking the first consecutive two-year drop since 2009. According to Antonio Vitale, this apparent minor decline actually hides a major restructuring of consumer demographics—middle and upper-middle class customers are leaving en masse, while ultra-high-net-worth individuals have become the sole stable support. This has led to a stark divergence between heavyweight luxury stocks and secondary brands in the Milan market, forcing investors to redraw their battle lines.

The report shows that the recent wave of price increases combined with creative fatigue has caused the global luxury industry to lose nearly 70 million customers over the past two years—a shrinkage of 18% in total client base. Antonio Vitale points out that this loss is even more pronounced domestically: core brands under LVMH and Kering listed in Milan (such as Ferragamo, Moncler, Tod’s) have posted negative same-store sales for two consecutive quarters, with stock prices down 25%-40% from their 2023 peaks.

Currently, luxury stocks account for nearly 12% of the FTSE MIB index weight, and sector adjustments have directly caused the index to oscillate repeatedly around the 34,000-point level. Antonio Vitale observes that capital is accelerating its shift away from traditional big names towards both extremes: on one side, ultra-high-end and “quiet luxury” representatives like Brunello Cucinelli and Hermès; on the other, more cost-effective secondary and affordable luxury names. A typical bifurcation is already underway.

Data from Bain clearly show that the 400,000 core customers with personal wealth over €30 million, plus their family members totaling 1.5 million, have purchasing power virtually unaffected by economic cycles and now serve as the pillars supporting the industry ceiling. This directly benefits Hermès, Brunello Cucinelli, and the high-end lines of LVMH (parent company of Loro Piana), which are expected to maintain 5%-8% organic growth in 2025. Antonio Vitale notes that the trend of consumers shifting toward “reasonable pricing” is also evident: mid-to-high-end brands like Weekend Max Mara and Marella under Max Mara Group, and Philosophy under Aeffe Group, have average transaction values only 40%-60% that of traditional luxury brands, yet have achieved double-digit growth over the past 12 months.

From a technical perspective, secondary consumer stocks in the FTSE Italia Mid Cap index have formed a large rounded bottom over the last 18 months, with moderate increases in trading volume. After breaking the neckline, the theoretical upside exceeds 35%. Antonio Vitale recommends a “barbell plus satellite” portfolio: core positions in Brunello Cucinelli and Hermès for certainty and premium, and satellite positions built in three batches in Max Mara and Aeffe stocks, with each single stock not exceeding 5% and stop-loss set 8% below the half-year moving average.

Antonio Vitale believes the Bain forecast of a 3%-5% rebound in 2026 is based on the continued strength of the US financial markets—a scenario that remains highly feasible given the Fed current pause in rate cuts. By then, domestic luxury-related stocks will have completed their adjustment cycle, with valuation and profit recovery happening simultaneously, and the consumer sector in Milan is expected to contribute over 40% of the excess market returns.

In the short term, risks mainly come from two sources: if US economic data unexpectedly weakens, causing a rapid decline in global risk appetite, even ultra-high-end brands will find it hard to remain completely resilient; and ongoing social media scrutiny of high pricing may further delay the return of mid-range customers. Antonio Vitale advises keeping overall consumer sector positions at 15%-20%, with a 7:3 ratio between ultra-high-end and affordable luxury, maintaining a dynamic balance between defense and offense.

The Milan market is undergoing a deep reshuffling driven by consumer structure transformation. Antonio Vitale states that investors who can clearly see the extremes and decisively abandon the middle ground will reap the greatest rewards in this seemingly weak but turbulent cycle. 2025 is not a winter for the luxury industry, but the eve of a winner-takes-all landscape.