- author, Joao da Silva
- role, Business reporter
China’s economic slowdown and Beijing’s crackdown on displays of wealth are hitting some of the world’s top luxury brands.
LVMH said sales in Asia, which includes China but not Japan, fell 14% in the three months to the end of June, worsening from a 6% drop in the first quarter.
The Paris-based company is not alone, as many of its rivals are struggling with sluggish sales in France, the world’s second-largest economy.
This comes as Chinese shoppers pull back on big-ticket purchases and government censors shut down the social media accounts of influencers who flaunted luxury items online.
LVMH, the world’s largest luxury goods group, also reported that overall revenue growth slowed to 1% in the same period.
Still, the group’s Chairman and Chief Executive Officer, Bernard Arnault, remained cautiously optimistic.
“LVMH’s performance in the first half of the year reflects its remarkable resilience in a climate of economic and geopolitical uncertainty.”
“While we remain vigilant in the current environment, the group approaches the second half of the year with confidence,” he told investors.
Shares in the company, which owns 75 luxury brands including Louis Vuitton, Dior and Tiffany, have fallen about 20% over the past year.
LVMH is not the only major company feeling the slowdown in luxury sales in China.
Swatch Group – Swiss watch manufacturer that owns Blancpain. Longines Omega announced that its sales in the first half of 2024 fell 14.4% compared to the same period last year due to weak demand in China.
Richemont, which owns Cartier, said its sales in China, Hong Kong and Macau fell 27% in the quarter ended June 30 from the same period last year.
German fashion giant Hugo Boss also cut its sales forecast for this year, citing weak consumer demand in markets such as China and Britain.
Other major players in the luxury industry, including Hermes and Gucci’s parent company Kering, are also due to report their latest financial results this week.
Flaunting luxury brands online has also come under scrutiny from Chinese authorities.
In May, state-run Global Times newspaper reported that online celebrity Wang Hongxing had been banned from social media in a crackdown on online displays of wealth.
His account on Douyin, China’s version of TikTok, had more than 4 million followers.
China’s internet watchdog said the campaign was aimed at banning “vulgar” and deliberately flashy content, and the accounts of several other popular influencers were also removed.
