LVMH Profits Hit By Weaker Chinese Demand

on July 25 2014 | in Fashion Retail | by | with No Comments

Louis Vuitton, China, LVMH

LVMH, the world’s largest luxury group and owner of Louis Vuitton, saw a marked slowdown in sales in the second quarter. The French conglomerate, known for their fashion, spirits, and cosmetics, reported significantly weaker demand driven by lower Chinese spending at home and abroad, and that protests in Hong Kong may be partly to blame.

While sales have been falling in European markets – where sales from Chinese tourists have declined in countries such as France – as well as in China, Reuters reports that Hong Kong generates nearly 10 percent of many luxury brands’ global sales. With the surge of pro-democracy protestors in the city, coupled with government spending advisories, it seems that many have been dissuaded from shopping there.

LVMH chief financial officer Jean-Jaques Guiony said that the declining sales are something luxury companies should be concerned about. In fact, the Swatch Group revealed similar unease about the future.

Louis Vuitton, the brand responsible for nearly 50 percent of LVMH’s profit, has been trying move away from big logo and elevate its exclusivity by introducing higher quality leather goods as well as new designs to boost appeal to the wealthiest consumers, but the payoff of these new measures is slow going.

LVMH also has been investing more in its smaller fashion labels as Chinese luxury consumers are now increasingly favoring boutique labels.

The one brand that has seemed to side step all of this trouble is Burberry. Unlike their competitors, they reported continued and steady growth in Chinese sales.



image credit: louis vuitton

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