Coronavirus outbreak a ‘disaster’ for luxury brands as China sales crash, says former LVMH executive
- Pauline Brown, a former chairwoman of LVMH North America, says Chinese buyers are ‘not feeling safe’ and have no interest in going out to shop
- As the virus has spread, several brands have been forced to close or restrict store opening hours in China and cancel fashion shows
In an interview with Yahoo Finance, Pauline Brown, a former chairwoman of LVMH North America, discussed the impact of the coronavirus epidemic on the luxury goods market and said that 2020 will be a “disaster” for many luxury brands, as sales within their largest customer base is slowing down.
Chinese consumers accounted for around 35 per cent of total spending in the global luxury market in 2019 and 90 per cent of the growth in global luxury goods sales, according to data from management consultants Bain. This makes them a crucial pool of customers for luxury brands to win.
In recent earnings calls, several brands have highlighted a drop in sales in mainland China thanks to the spread of the virus.
The CEO of Gucci’s parent company, Kering, said the company had seen a “strong drop in traffic and in sales” in its February earnings call. And earlier this month, Burberry scrapped its guidance for the year on account of uncertainty around the coronavirus outbreak.
