STORY: Chinese shoppers are watching what they spend – and that could spell deep trouble for some of the world’s luxury brands.
Top names are due to start reporting earnings next week, and investors are braced for signs of a steep slowdown.
Among the negatives was a surprise warning last month from Gucci-owner Kering.
It said first quarter sales would fall 10% – not the 3% forecast by analysts.
The French giant blamed a slump in Asian sales at Gucci.
Shares in the firm are down 15% since the warning.
LVMH – the world’s biggest luxury group – has seen its stock dragged lower too.
Analysts at JPMorgan forecast it will see flat sales over the first quarter.
Meanwhile, Britain’s Burberry is expected to see a decline of 10%.
While Switzerland’s Richemont – owner of brands like Chloe – may just eke out some growth.
Industry experts say it all comes back to China.
One told Reuters that “all growth engines have been turned off”, describing the slump there as unprecedented.
Analysts at HSBC say Chinese tourists in Hong Kong, Macau and Singapore just aren’t spending like they used to.
Sales numbers will also suffer in comparison to this time last year, when shoppers were on a post-lockdown spending spree.
What growth there is, may not be evenly shared.
Analysts say consumers pinched by a rising cost of living are getting more selective about luxury buys.
That could mean continued gains for strong brands like Louis Vuitton, but more of a struggle for others, like Burberry, which are undergoing a revamp.
