The luxury sector could see a 20% fall in first-quarter revenue and an ‘even worse’ second quarter
The luxury goods sector’s revenues are expected to fall 20% in the first quarter of 2020, industry analysts have warned, painting a bleak picture for the industry’s immediate future.
In a note to clients sent out on Thursday, a group of Bank of America analysts said that revenue declines experienced by luxury goods firms will range between 3% and 31% for the quarter.
What’s more, the reports warns that coronavirus-induced store closures across the US and Europe are likely to lead to “an even worse” second quarter for the industry.
One silver lining it identified was a potential upswing in demand for luxury goods in China.
French high-fashion retailer Hermès brought in 19 million renminbi, or $2.7 million, on the day its flagship store reopened in China’s southern city of Guangzhou, according to a report by Women’s Wear Daily, citing multiple sources.
The report stated: “We see scope for a V-shaped recovery in China given strong appetite for luxury products remains unchanged post-COVID-19, and the market will also benefit from a repatriation of spend.”
The news comes as luxury goods giants LVMH and Kering backtracked on plans to furlough staff amid widespread condemnation.
LVMH and Kering had sought to lean on the French government’s “partial activity” assistance scheme for businesses struggling during the coronavirus pandemic, despite both posting multibillion-dollar revenues for 2019.
But, according to the Financial Times, both firms reversed their decisions to seek assistance earlier this month.
For its part, the Business of Bank note predicted quarterly revenue declines of 19% and 15% for LVMH and Kering respectively.
Source: Business Insider
