After experiencing steady growth over the last several years, luxury conglomerates are starting to see a decline in stocks as strained financial conditions put a hold on high-end spending.
“Today’s news that LVMH’s revenue growth has slowed dramatically likely marks the end of a global luxury bubble,” said Nicholas Colas, DataTrek’s cofounder, via Business of Fashion. “LVMH is a very well-managed business, and investors have gotten used to seeing it post strong double-digit top line increases.”
Leading U.S. fashion companies, including
The U.S.’s falling results can be accredited to China’s economic hardships this year, according to BoF. While the country, which houses the world’s second-largest economy, continues to face financial strife, its consumers are more wary to purchase luxury items from international luxury labels at the same cadence.
While consumers hold onto their funds and luxury companies brave waning financial figures, Colas told the outlet that the U.S. tech industry will likely remain the only alternative for growth in investments: “The difference is that Tech is constantly creating ‘new new’ products at all price points, where luxury brand portfolios are largely stacked with many similar products at very high price points. A Kelly bag in a new, rare leather does not count as disruptive innovation.”
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