Top European luxury groups have shed about €250bn of market value this year as spending by Chinese consumers wilts and AI-driven stock market wobbles depress demand for high-end shoes and handbags. Results from LVMH, Hermès and Gucci owner Kering this month all missed market expectations, confirming fears that the luxury industry remains in the grip of a multiyear downturn. Europe’s six largest listed luxury companies — including Richemont, Prada and Moncler — have collectively lost €251bn of market value this year.
The declines have been steepest at LVMH and Hermès, whose market capitalisations have shrunk by €131.6bn and €93.3bn respectively. Demand from shoppers in China was the industry’s motor of growth for over a decade but a prolonged property slump and weak stock market performance have undermined domestic demand. Monthly retail sales growth in the world’s second-largest economy has averaged less than 0.5 per cent over the past six months.
“The Chinese luxury consumer recovery that the industry was hoping for has taken a pause,” said Bernstein analyst Luca Solca. LVMH, Kering and Hermès all flagged a marked deterioration in China in the third quarter. Sales at LVMH’s fashion and leather goods division fell by a mid-teens percentage among Chinese clients globally, CFO Cécile Cabanis said.
At Kering, which also owns Saint Laurent and Bottega Veneta, sales to Chinese consumers fell by between 15 and 20 per cent in the third quarter. The China chill has even begun to bite at Hermès, with its ready-to-wear and accessories division falling 2 per cent globally. Meanwhile the CSI 300 index has fallen 19 per cent over the past four months, a loss of more than $2tn.
Source: Financial Times Companies · Summarized by HeadlinesBriefing