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With the return of tourists to Europe since the spring, the consumer frenzy of the latter offers a good quarterly economic outlook for luxury houses. However, the situation in China remains their main dark cloud.
Despite rising prices due to inflation, the current turmoil in the stock market and the situation in China, which is becoming more and more gloomy due to the crisis, luxury houses have suffered little from the disruptions of recent months.
Indeed, consumer demand for luxury goods has remained and continues to be very solid. And the current strong tourist presence in Europe is expected to boost second quarter sales for luxury groups such as LVMH, Kering and Hermès.
In addition, Americans in particular are benefiting most from luxury goods, thanks to the euro’s move below the dollar last week. “American consumers are traveling to Europe like there’s no tomorrow,” said Mario Ortelli of luxury M&A consultancy Ortelli & Co. He predicts that they will boost sales of the sector on the continent.
For his part, Luca Solca, an analyst at Bernstein, expects this consumer frenzy to be largely visible in the second half of the year’s financial results of luxury houses. “We continue to see an oversized demand for high-end products in the market as consumers of all nationalities emerge from the pandemic. This has yet to normalize (for the second half of the year, ed.),” he says.
Consensus estimates call for second-quarter sales growth of 17% at LVMH, 16% at Hermès and 12% at Kering, based on forecasts from financial services firm UBS.
Concerns about China persist
Although U.S. tourists are raising hopes for the luxury sector’s growth prospects, the Chinese market, which is essential to a good economic dynamic, is still a concern.
The return of sanitary restrictions in China in many of the country’s major cities could cloud the results. In China, sales in the luxury goods sector fell by almost 40% in the second quarter, according to Barclays estimates. Taking these results into account, the British bank expects organic global sales growth of about 11%, half that of the previous quarter.
Moreover, Burberry and Richemont‘s second quarter 2022 results do not bode well for the future luxury houses that have yet to report their results. Indeed, both Burberry and Richemont reported a drop of more than 30% in sales due to COVID-19 restrictions in China.
It remains to be seen whether the situation in China will be reflected in the other major luxury groups. LVMH, Kering and Hermès will release their first half results on July 26, 27 and 29 respectively.
Read also > IN LUXURY, CREATING AN EMOTIONAL EXPERIENCE DOES NOT HAPPEN BY CHANCE !
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With the return of tourists to Europe since the spring, the consumer frenzy of the latter offers a good quarterly economic outlook for luxury houses. However, the situation in China remains their main dark cloud.
Despite rising prices due to inflation, the current turmoil in the stock market and the situation in China, which is becoming more and more gloomy due to the crisis, luxury houses have suffered little from the disruptions of recent months.
Indeed, consumer demand for luxury goods has remained and continues to be very solid. And the current strong tourist presence in Europe is expected to boost second quarter sales for luxury groups such as LVMH, Kering and Hermès.
In addition, Americans in particular are benefiting most from luxury goods, thanks to the euro’s move below the dollar last week. “American consumers are traveling to Europe like there’s no tomorrow,” said Mario Ortelli of luxury M&A consultancy Ortelli & Co. He predicts that they will boost sales of the sector on the continent.
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With the return of tourists to Europe since the spring, the consumer frenzy of the latter offers a good quarterly economic outlook for luxury houses. However, the situation in China remains their main dark cloud.
Despite rising prices due to inflation, the current turmoil in the stock market and the situation in China, which is becoming more and more gloomy due to the crisis, luxury houses have suffered little from the disruptions of recent months.
Indeed, consumer demand for luxury goods has remained and continues to be very solid. And the current strong tourist presence in Europe is expected to boost second quarter sales for luxury groups such as LVMH, Kering and Hermès.
In addition, Americans in particular are benefiting most from luxury goods, thanks to the euro’s move below the dollar last week. “American consumers are traveling to Europe like there’s no tomorrow,” said Mario Ortelli of luxury M&A consultancy Ortelli & Co. He predicts that they will boost sales of the sector on the continent.
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