PARIS (Business Emerge), July 25: As China’s economic challenges persist, the luxury goods market is facing significant setbacks. In recent reports, it has been revealed that major luxury brands are experiencing a downturn in sales, particularly in the Asian market, excluding Japan.
LVMH, the world’s leading luxury conglomerate, reported a 14% drop in sales in Asia for the three-month period ending in June, a decline that has worsened from the 6% drop observed in the first quarter of the year. The Paris-based company has also noted that overall revenue growth has decelerated to just 1% for this period.
Despite these difficulties, Bernard Arnault, Chairman and CEO of LVMH, expressed a cautious optimism. “The results for the first half of the year highlight LVMH’s exceptional resilience amidst economic and geopolitical uncertainties,” Arnault stated. He added, “While we remain attentive to the current conditions, the Group approaches the second half of the year with confidence.”
In addition to LVMH, other prominent names in the luxury sector are reporting similar slowdowns. British fashion house Burberry disclosed a more than 20% decline in sales within mainland China compared to the previous year. Swatch Group, which manages brands such as Blancpain and Omega, saw a 14.4% decrease in sales for the first half of 2024, attributing this to weak demand in China.
Richemont, known for its Cartier brand, experienced a 27% reduction in sales across China, Hong Kong, and Macau for the quarter ending June 30. German fashion label Hugo Boss has also revised its annual sales forecasts downward due to weak consumer demand in markets including China and the UK.
Upcoming financial reports from other major luxury brands like Hermes and Gucci-owner Kering are anticipated this week, which may provide further insights into the sector’s current state.
Recent data suggest that China’s economic recovery from the pandemic remains sluggish, with second-quarter growth and June retail sales falling short of expectations. Moreover, Chinese authorities have intensified their scrutiny of luxury displays on social media. In May, the Global Times reported the suspension of Wanghongquanxing, a popular internet celebrity, as part of a broader campaign against flaunting wealth online. His account on Douyin, China’s version of TikTok, had over four million followers. The crackdown has led to the removal of several influencers’ accounts as part of efforts to eliminate “vulgar” and ostentatious content.