WILMINGTON, Delaware: High-end fashion retailers launching early holiday shopping season discounts raised concerns that a slow Christmas shopping season could lead to inventory pile-ups.
Barclays’ latest U.S. credit card data released on Wednesday showed that in November, spending on luxury goods was still down 15 percent year-on-year after a 14 percent drop in October.
Barclays analysts said this decline “does not bring much optimism” for the fourth quarter.
Meanwhile, credit card data from Citi, also released on December 13, showed that in November, luxury fashion purchases were down 9.6 percent year-on-year after an 11.4 percent decline in October.
Olivier Abtan, consultant with Alix Partners, said that retailers had too much inventory at the start of the season. After a months-long, post-pandemic splurge, last year’s purchasing orders were made before the sector began to cool.
“They have already begun the season with overstock compared to normal levels,” Abtan said.
Caroline Reyl, Head of Premium Brands at Pictet Asset Management, which owns shares of LVMH, said, “We know that the U.S. consumer is going to keep being reasonable, and retailers have to adapt.”
Lower spending, caused by inflation in the U.S. and Europe, conflict in the Middle East and China’s property crisis, comes at the all-important end-of-year season, with November and December accounting for 25 percent of annual sales.
“It is not going to be a good Christmas for luxury brands,” Abtan stressed.
Department stores, especially those in the U.S., are known for aggressive discounts to attract shoppers, but offering lower prices can erode the attractiveness of fashion brands and encourage people to hold back for future deals.
