Chanel fashion’s decision to call off a prestigious but costly global art show is the latest sign that even the shine of the luxury industry is beginning to wear thin because of the crisis.
While big profits are still on the cards for the luxury sector in the months ahead, global sales are down, prices stagnating and less and less new boutiques opening.
“This is the sector’s toughest crisis in decades,” said Annie Girac, a consultant for Euler Hermes SFAC credit insurance firm.
Paris-based Chanel on Friday announced a premature end to the Chanel Mobile Art exhibition, a high-end arty tribute to its quilted bag-with-chain that traveled from Hong Kong to Tokyo to New York and had been due to continue to London, Moscow and Paris.
“In the current context we have to arbitrate. We prefer to refocus on our strategic investments,” Chanel said.
In just a year, said a Paris bank analyst, solid groups such as Switzerland’s Richemont, which owns the brands Cartier and Montblanc, or France’s LVMH, which owns Vuittonand Gucci, have lost 40 percent of their share value.
“We had never seen anything like this,” he said.
Italy’s Bulgari is expecting a fall in profits this year while Tiffany in the US has warned of a possible staff cut because of a third quarter drop in turnover.
Meanwhile LVMH, the world’s leading luxury conglomerate, saw its third quarter growth sliced 50 percent in comparison to the first two terms this year.
After expanding for four years with more than 10 percent annual growth, the luxury sector faces a 4 percent drop in sales next year, US investment bank JPMorgan said.
For some labels, the fall could be as much as a 10 percent to 15 percent, Deutsche Bank said.
But the crisis will hit some countries and products harder than others, said Emmanuel Bruley des Varannes, an analyst at French bank Societe Generale.
“The Japanese market,” he said, “has been very badly hit because the country is in a recession.”
LVMH sales in Japan have dived 7 percent in the first nine months, with the firm forced to drop prices both because of financial turmoil and to the 30 percent drop in the euro against the yen in the last three months.
And last week the luxury giant dropped plans to open the world’s biggest Vuitton store in Tokyo.
Commenting on the effect of the crisis on various luxury goods, Bruney des Varannes said watch makers were taking a bigger punch than makers of leather goods.
Swiss watch exports last month dropped more than 15 percent, with falls highest on the big Hong Kong and US markets.
France’s usually lucrative champagne exports too are wobbly, with sales to the US market down 17 percent.
“To protect themselves, luxury labels are cutting back on planned openings of new boutiques, freezing staff recruitment, closing some shops and refocusing activities,” he said.
Also See: Second-hand luxury goods defy crisis
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
SECURITY RISK: If there is a conflict between China and Taiwan, ‘there would likely be significant consequences to global economic and security interests,’ it said China remains the top military and cyber threat to the US and continues to make progress on capabilities to seize Taiwan, a report by US intelligence agencies said on Tuesday. The report provides an overview of the “collective insights” of top US intelligence agencies about the security threats to the US posed by foreign nations and criminal organizations. In its Annual Threat Assessment, the agencies divided threats facing the US into two broad categories, “nonstate transnational criminals and terrorists” and “major state actors,” with China, Russia, Iran and North Korea named. Of those countries, “China presents the most comprehensive and robust military threat