Content library


Fashion & Accessories November 2012

“European luxury stocks, once a must-have for portfolio managers seeking to avoid the European economic doldrums and get exposure to surging China sales, are falling out of favor, hit by concerns about slowing growth there. ” Reuters

In November many fashion brands reported poor sales results, Hermès being one that bucked the trend. Their third quarter sales of 409.5 Million Euros in Asia-Pacific were a year-on-year increase of 28.9% accounting for almost half of the overall third quarter income. China on its own achieved a year on year growth rate of 27%.

Performance in Europe was also lower than expected, however, the luxury market in France still maintained strong growth, which ought to be attributed to the contribution tourists and possibly the Chinese as the largest group made. Hermès sits at the pinnacle of luxury within its sector in the eyes of the Chinese, so it is a very popular purchase, especially when money is tight. It is perceived to offer the highest quality and hence value for money, as well as being a collectable ‘investment’.

The market may well have been slow here in China, but luxury brands should be thankful for the travelling Chinese who are spending in Europe and the USA. If they weren’t keen to see the world and snatch a bargain, the entire sector would be in a very sorry state. As discussed elsewhere in Luxury Insights China, we await the New Year and the hope that a new leadership will lift domestic consumer confidence.

Compared to the achievement of Hermès, other major luxury brands attained record lows of year on year growth in the last quarter. Burberry, Prada and Gucci all dipped into single figures. Even LVMH fashion and leather sales only attained a 5% sales growth.

Stores continue to open

  • Relatively poor results did not stop the store-opening machine working away as usual. Between mid October to mid-November new stores were opened by Chanel in Dalian, Max Mara in Nanjing, Gucci in Chongqing and Lanzhou on the same day, and in Suzhou two days later. Hermès opened its first store in Central China in Wuhan, and Prada its first in Jinan.
  • New and lesser-known brands entering in recent years also continue to expand. Roger Vivier opened two flagship stores in Beijing and Shenyang and the TOD’s brand Hogan opened another store in Beijing. Other ‘China virgins’ in the last few weeks have been Karen Millen and Kate Spade.

Brand promotion

  • From the 8th to 11th November, the Florence Gucci Exhibition
  • ran in the Gucci boutique in Zhuozhan Times Square
  • in Shenyang, and from 15th November, it moved to the Zhengzhou Gucci shop in Dennis Department Store for a further four days. This is the first exhibition in China of Gucci historical products to display the brands deep rooted heritage of leather craftsmanship from Florence. The exhibition will continue to visit other Chinese cities, including Nanjing, Wuhan, Hangzhou, and will then continue to be extended to other countries.

The “Esprit Dior” exhibition will be held in the National Museum of China in Beijing from 10th December until January 2013.



Comments are closed.