Some of the world’s leading luxury brands are being affected by China’s economic slowdown and Beijing’s assault on displays of wealth.
LVMH says its sales in Asia, which include China but not Japan, fell by 14 % in the three months to the end of June, worsening from a 6 % decline in the first quarter.
The Paris-based company is not alone, as many of its competition are also seeing profits decrease in the world’s second largest business.
It comes as Chinese consumers cut back on costly payments and state censors shut down celebrities ‘ social media accounts who have displayed their luxury items online.
LVMH, which is the world’s largest luxury group, also said its overall revenue growth had slowed to 1 % for the time.
However, the group’s chairman and chief executive Bernard Arnault remained slowly positive.
” The benefits for the first half of the month reflect LVMH’s amazing tenacity… in a culture of economic and geopolitical uncertainty”.
” While remaining diligent in the current environment, the Group approaches the next quarter of the year with confidence”, he told investors.
Shares in the the organization- house to 75 high-end companies including Louis Vuitton, Dior and Tiffany &, Co- have fallen by about 20 % over the last year.
Not just the biggest names in China are feeling a decline in sales of luxury items.
Upmarket American label Burberry claimed in its most recent economic figures that its sales in mainland China had fallen by more than 20 % compared to the same period last month.
Swatch Group – the Swiss watchmaker which owns Blancpain, Longines and Omega – said weak demand in China helped push down its sales by 14.4% for the first six months of 2024, compared to the same time the previous year.
Richemont, which owns Cartier, saw sales in China, Hong Kong and Macau, drop 27 % year-on-year in the quarter ending on 30 June.
Hugo Boss, a European style company, downgraded its year-ahead sales forecasts amid concerns about sluggish buyer demand in nations like China and the UK.
Another big luxury goods market players, including Hermes and Gucci-owner Kering, are expected to record their latest economic results this month.
New economic data from China suggests that the country’s economy is still struggling to recover from the effects of the global recession, with both June retail sales figures and second quarter growth falling short of expectations.
Chinese authorities have also been looking into the virtual luxury models that flaunt them.
In May, a state-controlled paper called Global Times reported that Wanghongquanxing, an online celebrity, was “affected by a crackdown on virtual prosperity show-offs.”
His profile on Douyin, China’s parallel of TikTok, had more than four million followers.
In a battle that China’s world watchdog claims is meant to ban “vulgar” and purposefully ostentatious content, a number of other well-known influencers have also seen their accounts deleted.