The European luxury goods sector fell back on Wednesday's trading following the publication of Moncler's quarterly results, with the Italian group reporting a 3% drop in sales at constant exchange rates against a backdrop of slowing global demand.

Deutsche Bank, RBC, Jefferies and JPMorgan lowered their price targets for Moncler to €55, €59, €46 and €55 respectively, as luxury goods groups face a downturn in consumer spending in recent quarters, particularly in China.

In a note, Berenberg points out that the Moncler brand is slightly more exposed to Asia and China than its competitors.

"Given our concerns about the potential structural headwinds facing China, the country therefore presents a risk," writes the intermediary, pointing out that Asia accounts for 50% of Moncler brand revenues, compared with a sector median of 45% and 39% for the global industry.

At around 10:25 GMT on the Milan Stock Exchange, Moncler shares were down 2.38% at 51.74 euros, compared with a 0.93% decline for the FTSE MIB and a 0.81% drop for the pan-European Stoxx 600 index, which fell to a five-week low during the session.

At the same time, the European luxury goods index dropped 1.76%, with groups such as LVMH (-2.47%), Kering (-3.83%), Hermès (-1.31%) and L'Oréal (-2.03%) in the red.

In a report entitled "Luxury goods China syndrome", published on Tuesday, Berenberg indicates that it has begun monitoring seven European luxury goods companies.

The intermediary says it favors "absolute" and "soft" luxury companies, with a "buy" recommendation on Brunello Cucinelli, Hermès and LVMH, while advocating a "defensive position".

With moderate growth prospects for the luxury goods sector, Berenberg believes that market share gains have become essential for brands in the sector.

"China holds an important place", notes Berenberg, as the Chinese market now accounts for 22% of the sector's revenues and is expected to reach 60% by 2030.

But China's spending carries risks, as the headwinds it faces could be more secular than cyclical, given debt, demographics and politics, the intermediary continues.

Berenberg points out that the watch segment is its least favorite due to high capital requirements, currency fluctuations and more volatile demand in China.

(Written by Claude Chendjou, edited by Kate Entringer)