by - Author, Joao da Silva
- Role, Economic journalist
China’s economic slowdown and Beijing’s crackdown on displays of wealth are taking a toll on some of the world’s biggest luxury brands.
LVMH said its sales in Asia, which includes China but not Japan, fell 14% in the three months to the end of June, worsening the 6% decline in the first quarter.
The Paris-based company is not alone, as many of its competitors are also seeing their sales slow in the world’s second-largest economy.
The move comes as Chinese consumers cut back on big-ticket purchases and government censors shut down the social media accounts of influencers who have showcased their luxury products online.
LVMH, the world’s largest luxury group, also said its overall revenue growth slowed to 1% for the period.
The group’s chairman and CEO, Bernard Arnault, nevertheless remains cautiously optimistic.
“The first half results reflect LVMH’s remarkable resilience… in a climate of economic and geopolitical uncertainty.”
“While remaining vigilant in the current context, the Group is approaching the second half of the year with confidence,” he told investors.
Shares of the company – home to 75 high-end brands including Louis Vuitton, Dior and Tiffany & Co – have fallen nearly 20% over the past year.
LVMH is not the only major group to feel the slowdown in luxury goods sales in China.
Swatch Group – the Swiss watchmaker that owns Blancpain, Longines and Omega – said weak demand in China helped push down its sales by 14.4% for the first six months of 2024, compared with the same period a year earlier.
Richemont, owner of Cartier, saw its sales in China, Hong Kong and Macau fall 27% year-on-year in the quarter ended June 30.
German fashion giant Hugo Boss has cut its sales forecast for the year due to concerns over weak consumer demand in markets including China and the UK.
Other major players in the luxury sector, including Hermès and Kering, owner of Gucci, are due to publish their latest financial results this week.
The promotion of luxury brands online is also under scrutiny by Chinese authorities.
In May, the state-controlled Global Times newspaper reported that an internet celebrity named Wanghongquanxing had been banned from social media “as part of a crackdown on online braggarts.”
His account on Douyin, the Chinese equivalent of TikTok, had more than four million followers.
Several other popular influencers have also had their accounts deleted in a campaign that China’s internet watchdog said was aimed at banning “vulgar” and deliberately ostentatious content.
Additional reporting by Fan Wang
