(qlmbusinessnews.com Thurs. 25th July, 2024) London, UK —

“LVMH and Rivals See Sales Decline Amid China’s Crackdown on Wealth Displays”

The economic slowdown in China, coupled with a crackdown on ostentatious displays of wealth by Beijing, is impacting some of the world's leading luxury brands.

LVMH reported a 14% decline in sales across Asia, excluding Japan, in the three months ending June, a sharp increase from a 6% decline in the first quarter. This Paris-based luxury giant is not alone, as many competitors are also experiencing a downturn in the world's second-largest economy.

Chinese consumers are increasingly curtailing their spending on high-end goods, and government censors are targeting social media influencers who flaunt luxury items online.

LVMH, the world's largest luxury conglomerate, also revealed that its overall revenue growth had slowed to 1% for the period. Despite this, Bernard Arnault, the group’s chairman and CEO, remained cautiously optimistic. “The results for the first half of the year reflect LVMH’s remarkable resilience in a climate of economic and geopolitical uncertainty. While remaining vigilant in the current context, the Group approaches the second half of the year with confidence,” he told investors.

Luxury Brands Hit Hard as Chinese Shoppers Cut Spending

Shares in LVMH, which owns 75 prestigious brands including Louis Vuitton, Dior, and Tiffany & Co., have dropped by nearly 20% over the past year.

Other luxury brands are also feeling the pinch in China. British fashion house Burberry reported a more than 20% decrease in sales in mainland China compared to the previous year. Swiss watchmaker Swatch Group, owner of Blancpain, Longines, and Omega, saw a 14.4% drop in sales for the first half of 2024, citing weak Chinese demand.

Richemont, which owns Cartier, reported a 27% year-on-year decline in sales across China, Hong Kong, and Macau for the quarter ending 30 June. German fashion giant Hugo Boss has also downgraded its annual sales forecast due to weak consumer demand in China and the UK.

Other major players in the luxury sector, including Hermes and Gucci-owner Kering, are set to announce their latest financial results this week.

Recent economic data from China indicates a continued struggle to recover from the pandemic, with second-quarter growth and June retail sales figures falling short of expectations.

Chinese authorities are also clamping down on the online display of luxury goods. In May, state-controlled newspaper Global Times reported that an influencer known as Wanghongquanxing was banned from social media amid a crackdown on flaunting wealth. His account on Douyin, China’s version of TikTok, had more than four million followers. Several other popular influencers have also had their accounts deleted as part of a campaign by China’s internet watchdog to eliminate “vulgar” and ostentatious content.

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