Business
Chinese Consumer Confidence Slump: Global Luxury Brands LVMH, Burberry, and Kering Bear the Brunt
LVMH, Burberry, Kering are experiencing financial pressure as Chinese shoppers cut back on spending. The dwindling faith of China's middle-class consumers may potentially worsen the sales of international high-end brands, according to market analysts.
Prior to the Covid-19 pandemic, Liu Fang would spend around 300,000 yuan (equivalent to US$42,144) annually on high-end bags and accessories. However, she has now reduced her expenditure by 50%, skeptical that the latest round of economic stimuli from Beijing will significantly change China's current economic situation.
The 57-year-old professional from Beijing mentioned in a discussion that her expenditures were minimal, with the exception of purchasing several Chanel bags. She pointed out that the current economic climate is not favorable. Additionally, she has fewer instances where she needs to dazzle clients with high-priced accessories.
Liu's perspective isn't unique. A large number of Chinese shoppers have become more frugal when it comes to premium goods, negatively impacting the business of international luxury brands ranging from LVMH to Burberry and Kering. China's middle class, who are highly valued for their buying capacity, are currently dealing with the repercussions of the pandemic, a collapse in the real estate market, and significant losses in the stock market.
LVMH reported a 16 per cent annual decrease in its sales in Asia, not including Japan, in the quarter ending on September 30. This follows a 14 per cent decline in the previous quarter. The French conglomerate, whose brands encompass Louis Vuitton and Loewe, experienced a slump due to "an overall softening in the luxury goods market," according to Morningstar.
Three forty-nine
Xi's rallying call establishes economic objectives for Chinese authorities, forgiving them for past errors.
"Jelena Sokolova, a top stock analyst at a US research company, stated that LVMH's performance remained solid during the first half of the year. She added that the company usually shows resilience, therefore the decline in the third quarter is a negative indicator for the industry."
In light of China's floundering economy and ambiguous short-term outlook, consumers have grown progressively hesitant to utilize their savings, according to Richard Lin, the head consumer analyst at SPDB International, a banking group operating out of Shanghai.
Discover more from Automobilnews News - The first AI News Portal world wide
Subscribe to get the latest posts sent to your email.