Shuttered Stores, Fewer Tourists: Luxury Feels Coronavirus Effects

Several leading American fashion groups have also cut their profit forecasts this month. Last week, Capri, the owner of Michael Kors, Versace and Jimmy Choo, said it was reducing its sales outlook for the quarter by $100 million after closing 150 of its 225 mainland China stores. And Tapestry, which owns Coach, Kate Spade and Stuart Weitzman, said it was expecting sales to drop as much as $250 million after closing most of its stores across mainland China.

“Luxury spending has hit a sudden stop in China, with sales either at zero for most brands or down by at least 80 percent,” said Luca Solca, a global luxury goods market analyst at Bernstein. “The coronavirus is likely to have a greater impact on the sector than the SARS epidemic did in 2003, given how much more reliant brands are on China and Asia for sales growth.”

Concerns are also growing around the effect on consumer morale. Beyond just the physical barriers to luxury spending, the contamination fears centered on crowded places are unlikely to create the sort of positive emotional and psychological background that make people inclined to shop.

Little wonder, then, that major names have clamored to publicly donate money to combat the outbreak. On Jan. 27, Louis Vuitton Moet Hennessy LVMH announced that it had given $2.2 million to the Red Cross Society of China. Days later, Richemont donated $1.4 million to the same cause, and Kering donated $1.1 million.

Article source: https://www.nytimes.com/2020/02/14/business/coronavirus-luxury-retail.html?emc=rss&partner=rss