By CultureBanx Team
- Gucci and Yves Saint Laurent’s parent company Kering SA had a 13% decrease in sales
- An index of top European luxury brands having lost $175B since March
Luxury brands are experiencing a slump, and the situation is more precarious than a fashionista in six-inch stilettos. Kering (KER.PA +3.64%) had a questionable quarter, sliding 13% overall, with sales down across Gucci, Yves Saint Laurent, Bottega Veneta, and Balenciaga. A recent downturn in sales and a shift in cultural relevance has left these brands navigating rough waters.
Why This Matters: In the realm of high-end fashion, luxury brands have long been the titans, shaping trends and dictating style narratives. However, the tides are shifting with an index of top European luxury brands having lost $175 billion since March, according to The Messenger.
Even hip-hop favorite French luxury giant LVMH (LVMUY +4.35%), owner of Louis Vuitton, Christian Dior, Tiffany & Co., Hublot, and more also worried investors, with Q3 showing a sharp downturn in sales growth. The 1% group revenue growth was “a marked slowdown from the growths of 16.8% and 13.2% recorded in Q1 and Q2 respectively,” according to GlobalData.
Additionally, the luxury fashion industry is heavily reliant on China’s demand. When the second-largest economy in the world thrives, luxury brands flourish. However, right now China’s property sector is crumbling with a downturn in real estate and related industries. Since a high in July 2020, the shares of Evergrande, the world’s most indebted developer, have plummeted 99%, wiping out almost $47 billion in market value and creating a housing slump.
Situational Awareness: There are still some bright spots in the luxury market including the likes of Chanel, which just increased its handbag prices between 11% – 16%. Also, Hermes grew revenue 7% year-over-year, even though its prices also shot up 7% this year. The future of luxury brands hinges on their ability to navigate the cultural waves and economic tides collectively.
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