Latest news with #luxurymarket
Times
16-05-2025
- Business
- Times
How will LVMH and its luxury competitors cope with tariffs?
You would think the type of shopper who can afford a Tag Heuer watch or a Hermès Birkin bag, costing tens of thousands of pounds, would largely be immune from macroeconomic turbulence. But their longstanding resilience, including during the pandemic, is now being tested. The $350 billion global luxury market is facing challenges as geopolitical instability and tariffs introduced by President Trump shake investors' confidence and sap consumers' appetite in two of its most crucial regions: China and the United States. Trump has imposed a 145 per cent tariff on Chinese imports to the US, provoking immediate retaliation from Beijing, which hit back with a 125 per cent tariff on American goods. Although Trump's measures were paused for 90 days, the shock has already rippled
Times
14-05-2025
- Business
- Times
Burberry to cut almost a fifth of workforce in savings drive
Around 1,700 jobs could be lost at Burberry, the British fashion house has warned, as a downturn in the global luxury market pushed it to a loss. Joshua Schulman, the chief executive who was appointed in July to turn around the business, said that the cuts — which amount to up to 18 per cent of its global workforce — would be focused on the group's head offices, which are led by London, over the next two years. Headcount would also be reduced by reorganising staff rotas and dropping the night shift at its factory in Castleford, west Yorkshire, as part of a cost-cutting drive aimed at making an additional £60 million in savings and reviving the company's profitability. The cost reductions, which are being
The Independent
09-05-2025
- Business
- The Independent
Investors pin hopes on Burberry's recovery amid China and US trade upheaval
Investors are hoping Burberry can restore confidence in its turnaround efforts, as the brand weathers major trade disruption in China and the US and an under-pressure luxury market. The global fashion house, which is listed on the London Stock Exchange, will unveil its full-year financial results on Wednesday. It launched a £40 million cost-cutting programme in November after sinking into a loss. Analysts think the company will report an operating loss of about £7 million for the year to March 2025 – but eke out a profit of £11 million on an adjusted basis. It previously said its second-half results were likely to 'broadly offset' adjusted losses over the first half. Group revenues are forecast to total about £2.5 billion for the year, with retail sales dropping 12% compared with the previous year. Burberry's share price has dwindled in recent months, and it took a hit in the aftermath of Donald Trump's 'liberation day' tariff announcements in April. Mr Trump placed steep tariff rates on Chinese exports, which China reciprocated by hiking levies on US exports, raising fears about how trade between the world's two largest economies will be affected. The British brand has significant exposure to shoppers in Asia, and has been growing its sales in the US amid the popularity of its staple styles including trench coats and scarves. It had already been struggling against a slump in demand among shoppers in China, one of its biggest markets, which has been dragging heavily on sales. Nevertheless, Burberry told investors at the beginning of the year it was moving with 'urgency' to turn the business around and return to profit, and that there were early signs these efforts were paying off. It also pointed to signs of recovery in Asia, although sales in the region still dropped by nearly a tenth over the third quarter. The brand has launched new marketing campaigns over the past year, enlisting the likes of actors Olivia Colman and Barry Keoghan, helping drive demand for its bestselling outerwear products. Investors will be hoping the brand can give an update on how the trade disruption and uncertainty are impacting exports and its supply chain, and whether it is hampering turnaround efforts.
Yahoo
08-05-2025
- Business
- Yahoo
Luxury Grapples With Disillusionment and Fragile Recovery in China
SHANGHAI — The Chinese retail market showed signs of 'fragile recovery' in the first quarter amid an ongoing trade war and domestic economic headwinds, according to a report by Bernstein. The bank's latest report said March data recorded a 5.9 percent uptick for consumer retail sales and steady travel growth and indicated that the Chinese are spending again, albeit more selectively. More from WWD Michelangelo Foundation Focusing More on U.S. to Champion Artisans Prada Outlines Strategic Expansion Plans as Q1 Sales Gain 13% Prada Group Gains 13% in Q1 as Miu Miu Surges Value-conscious consumers have helped drive online sales, which grew by 14 percent across platforms like Tmall, Taobao and Douyin, added Bernstein. As for the luxury market, Bernstein expects a 'gradual U-shaped recovery over the next two years.' 'Younger Chinese consumers seem to be spending more on well-being and the outdoors, favoring athleisure and outdoor apparel brands like Lululemon and Arc'teryx and shifting share of wallet away from luxury brands,' it observed. 'Middle-class consumers have been holding back, spending money differently, as well as concentrating their spending on 'investment grade' luxury brands. Louis Vuitton, Hermès and Chanel continue to do well,' the report said. 'The hottest and most innovative brands like Miu Miu and Moncler will continue to win over Chinese shoppers,' added the report. China's economy expanded 5.4 percent year-over-year in the first quarter, in line with performance in the previous fourth quarter. China has set a target growth rate of around 5 percent for 2025. Against the backdrop of economic decoupling under Trump 2.0, 'China for China' will continue to drive nationalistic consumption. 'Local Chinese brands have built major inroads in many consumer product categories, autos and beauty being two prominent examples. This is a structural trend.…No clear Chinese leaders have yet emerged in most of these [luxury goods] categories, which remain highly fragmented. But the market share of local brands is materially rising,' Bernstein wrote. With persistent deflation pressure, structural real estate woes and lower perceived job security, consumers have markedly delayed purchases, expecting lower prices in the near future. Despite consumer reluctance to spend, the opening of new malls continues to generate excitement and boost foot traffic, highlighting the uneven nature of China's recovery. In Shanghai, a core luxury hub, shopping malls like the cement factory-turned Gate M and the streets of the former French Concession draw crowds looking for meaningful consumption moments instead of status-driven purchases. Inside luxury shopping malls, VIP store formats continue to lure in high rollers. After launching its first major VIP-oriented project at Plaza 66's private salon, Schiaparelli has revealed plans to return to the luxury mall in due course. A few weeks ago, shoppers noticed hoarding for a Prada VIP salon at the same mall, which will mark the Italian brand's return after a four-year hiatus. In 2026, Shanghai's prestigious Plaza 66 will see the opening of a 33,150-square-foot annex hall. With a 'Shanghai First' mandate, the local government has attracted investment for several large-scale retail projects. ITC, one of Sun Hung Kai Properties' biggest projects ever, is set for total completion by the end of 2025. Located in the heart of Xujiahui, it offers 7.6 million square feet of gross floor area for offices, retail and an Andaz hotel. The first phase of ITC, opened in 2019, has attracted brands including Louis Vuitton, Gucci and Prada to take up prime, street-facing spaces. Hongkong Land's $8 billion Shanghai West Bund Financial Hub, which includes luxury residential apartments, hotels and Central, its flagship premium lifestyle retail series, will begin opening in phases in 2027. The Kerry Jinling Road project, a new mixed-use development in the heart of Shanghai managed by the real estate arm of Malaysian billionaire Robert Kuok's Kuok Group, is set to open in phases by 2028. The second phase of New World Development's K11 on Huaihai Road, billed as a 'brand-new art and culture landmark' sitting right behind the Hermès Shanghai maison, and the second part of Swire Properties' Taikoo Li Qiantan complex are both on track to open in the near future with ample space reserved for luxury tenants. In Beijing, mega flagships continue to lead luxury retail developments. Following the opening of Balenciaga's largest flagship, which is part of Sanlitun Taikoo Li's grand restructuring project for its Northern District, this year will see the unveiling of three standalone structures for Dior, Louis Vuitton, and Hermès. Brands have also been making meaningful forays into second-tier cities. A new Miu Miu 'home' concept store quietly opened at Wuhan SKP, the Swiss running brand On Holding's first China flagship launched at Taikoo Li Chengdu and Lemaire's first China store also opened at the open-plan shopping mall last year. As luxury players patiently wait for new spaces to open up, unique offline moments, such as exhibitions, yearlong pop-up stores and VIP events, are being created in existing retail projects or memorable historic buildings to lure locals and Asian tourists. Recent examples included Celine's Zhangyuan pop-up, Valentino's series of pop-ups along Suzhou Creek and Bottega Veneta's book giveaway and performance. However, as brands grapple with shrinking marketing budgets, even minor execution flaws can quickly escalate on Chinese social media — strategies that appear sound in theory often hit unexpected hurdles. For example, Bottega Veneta's recent book giveaway event, a cultural moment created in collaboration with the Chinese poet Yu Xiuhua, was criticized by Chinese netizens on Xiaohongshu, who described it as haphazard and 'unrelated to the poet's work.' 'Waiting in line to pick up a book makes me remember how we had to wait in line for eggs in the 1960s,' one participant wrote. Last weekend, Michael Kors' summery pop-up at Hangzhou's iconic West Lake also became a hot topic online after fans of its APAC brand ambassador, Yang Zi, spotted a misspelling of the actor's name in an official social media post. The error quickly sparked backlash online, with some fans even calling for a boycott of the brand. To some extent, the ongoing criticism online reflects growing consumer disillusionment with superficial luxury branding — a sentiment underscored by the popularity of the TikTok Chinese Dupe trend — and a rising interest in local alternatives, at least in the contemporary and mass market consumer goods category. 'Bragging about craftsmanship and artisanal skills, while relying on third-party manufacturing, maybe overseas, looks like a recipe for guaranteed reputational damage. In the era of social media, luxury brands — like we all — live in glass houses,' wrote Bernstein's Luca Solca. 'Upstream integration is a must to preserve brand equity,' Solca added. According to a recent survey conducted by TD Cowen and based on answers from 2,000 consumers across key cities in China, significant changes in attitudes are happening across the board as anti-Western sentiment rises. Twenty-eight percent of respondents found Western brands less appealing, up from 25 percent in 2024. In the sportswear segment, Nike's popularity declined, but ratings for Lululemon, Ralph Lauren, Hoka and On Holding showed small upticks. 'The survey indicates a lower preference for Gucci, although there is a growing preference for Cartier. Luxury consumers are more price conscious and have less preference for handbags relative to other luxury categories,' observed Oliver Chen, a TD Cowen analyst. Sign in to access your portfolio
