3 Luxury Consumer Brands to Watch in a Beaten-Down Sector

Key Points

• RH, Birkenstock and Capri Holdings shares have all declined significantly in 2026, even though each company shows underlying strength in luxury demand.
• RH beat earnings expectations and is expanding its RH Estates line, but cautious analyst ratings reflect concerns over housing trends and margins.
• Birkenstock maintains full-price sales and brand loyalty despite tariff pressures, while Capri has cut debt sharply and preserved its profit outlook.

Luxury brands must find a delicate balance between continuing to cultivate an air of exclusivity, maintaining perceived quality even in spite of higher materials costs and inflation, and balancing price increases against customer tolerance. While retail more broadly has faced numerous challenges as consumers have tightened their belts, some high-end luxury brands have largely avoided these pitfalls.

This doesn't necessarily mean that those luxury companies are positioned advantageously looking ahead, though. In order to be truly attractive to investors, high-end brands must not only benefit from continued strength in their sales but must also demonstrate that they are likely to be resilient if those consumers with a higher degree of disposable income trim their discretionary expenses. The companies below have the former, but it will be up to investors to assess whether they also possess the latter.

RH's Decline May Be an Opportunity, Though Uncertainty Lingers

High-end home furnishings company RH NYSE: RH, formerly Restoration Hardware, recently lost some of its luster for investors after a mixed Q2 2026 earnings report, issued in September 2026. On one hand, the company certainly outperformed analyst predictions: both revenue and earnings per share (EPS) were wins over expectations, the latter beating forecasts by an impressive $2.32 per share. Sales growth was 2.6% year over year (YOY), which is hardly exceptional but still better than analysts had estimated.

On the other hand, a confluence of factors ranging from the housing downturn to unforeseen supply chain costs are all weighing on internal forecasts going forward. RH management predicts 5.5% to 7% in revenue growth for the full fiscal year as well as free cash flow ranging from $300 million to $400 million.

Investors seem to have expected better on this front; the market sent RH stock cratering by 10% in a five-day period in mid-September, bringing total declines to about 27% year to date (YTD). Still, there are reasons why RH could turn things around.

Its luxury RH Estates line is making real progress at expanding its addressable market and is also helping to boost average price points, which are currently about 45% higher than the company's prior assortment. All of this should help boost RH's margins.

Understandably, analysts are cautious: only seven out of 20 have rated RH shares a Buy, despite the projected upside potential of 27%. After an insider sell-off earlier in the summer, investors must decide if RH shares have farther to fall.

Birkenstock's Brand May Be Its Biggest Asset

Birkenstock Holding plc NYSE: BIRK has managed to maintain interest in its high-end sandals, selling them at full price while rivals like On Holding NYSE: ONON have resorted to extensive promotions. The company has one of the strongest brands and most loyal customer bases across the footwear space and may benefit from a perception that its products have not declined in quality while many competitors' have.

That's not to say that Birkenstock has been free of challenges. Shares of BIRK are down 25% YTD, and profitability is facing pressure due to tariffs, increased freight costs, foreign exchange rates, and much more.

This has brought down the firm's adjusted gross margin, which fell by 130 basis points YOY last quarter.

At the same time, though, 13.3% YOY revenue growth has given management confidence to suggest that Birkenstock may see 15% in constant-currency revenue growth with solid adjusted EBITDA for the full fiscal year.

Adjusted EPS may be struggling a bit, but broad-based growth may help Birkenstock to recover in the coming quarters.

Capri Is Not Out of Trouble, But Profitability and Reduced Debt Are Strong Points

Luxury fashion holding company Capri Holdings Ltd. NYSE: CPRI is best known for owning brands like Michael Kors and Jimmy Choo.

The firm has undergone brand elevation transformations that parallel RH's plan to amplify its Estates line, showing that Capri also believes that ultra-luxury consumers will be a durable source of demand (and revenue) even as other customers are squeezed.

Profitability for the latest quarter was better than expected, even as revenue declined modestly YOY. Perhaps most importantly, though, Capri management maintained a fairly ambitious fiscal year EPS outlook, even though it did lower its revenue outlook for the same period. Capri has also managed to significantly trim its debt to $224 million last quarter, compared to $1.5 billion the year prior, which may signal its financial health. However, like the companies above, Capri has seen shares shed value this year, falling 29% YTD and leaving some analysts cautious.