Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Sunday, Apr 02, 2023

Global luxury sector to get a boost on China’s reopening

Global luxury sector to get a boost on China’s reopening

After a year of record sales and profits despite slowing global growth the luxury sector is looking to the reopening of China to deliver further expansion in 2023.
The world’s largest luxury group LVMH posted a 23-percent jump in sales to a record of €79 billion ($86 billion) in 2022 and saw profits climb 17 percent to €14 billion.

The company’s chief executive, Bernard Arnault, wants to continue along that path in 2023, “at the risk of becoming boring.”

LVMH’s rivals also managed blistering growth in sales and profits last year.

Sales at Hermes jumped 29 percent to €11.6 billion and profits soared 38 percent to a record €3.4 billion.

Kering, despite a tough time for its flagship brand Gucci, still managed a 15-percent increase in sales to €20 billion, while profits rose 14 percent to €3.6 billion.

Ferrari also saw sales race to a new record of €5 billion, delivering 13,221 vehicles last year.

The 2022 results were barely dented by the disruption in China linked to end of its coronavirus-related travel restrictions and their progressive lifting at the end of the year, with LVMH calling the month of December an “air pocket.”

Only Hermes escaped unscathed.

“There was no drop in traffic in our stores,” said Hermes chief executive Axel Dumas.

The company’s sales rose 30.7 percent in its Asia-Pacific region excluding Japan.

The gradual reopening of China — which abandoned the last of the draconian travel restrictions of its zero-COVID policy on Jan. 8 — should help its economy expand by 5.2 percent in 2023, according to the International Monetary Fund’s latest forecast.

With the restrictions having restrained consumption, the reopening of the Chinese economy is being looked at as a growth opportunity for 2023.

Analysts at UBS say 2023 will be the “year of the Chinese consumer,” noting that the pandemic restrictions pushed down the share of Chinese consumers in global luxury spending to 17 percent last year, compared with 33 percent before the pandemic.

“The Chinese clientele is much more important than it was in 2019,” LVMH’s Financial Director Jean-Jacques Guiony told journalists.

Guiony does not expect Chinese tourists to return to Europe, where they traditionally spent heavily on luxury goods, before next year.

Instead, luxury groups are focusing on Chinese consumers at home.

LVMH’s Arnault said it was no secret that China needs growth and that the government would likely take steps to facilitate economic expansion as the country reopens.

“If that is indeed the case — and it began in the month of January — we have every reason to be confident, even optimistic about the Chinese market,” he said at the presentation of LVMH’s 2022 results.

China is a “volcano ready to explode,” said Arnaud Cadart at asset manager Flornoy Ferri.

“There is an incredible amount of savings that has been built up, an incredible reserve in the hands of the well-off class which wants to purchase luxury goods,” he added.

Cadart estimated the luxury market in China could jump by 30 percent this year.

Kering’s chief executive Francois-Henri Pinault visited China at the end of January and said he was amazed by the people thronging stores “like the virus had never been in China.”

“This is a good sign,” said Pinault, who also welcomed moves by Chinese authorities to boost domestic consumption.
Newsletter

Related Articles

Hong Kong News
Close
0:00
0:00
The G-7 aims to make global crypto regulations tougher
Don’t Dismiss China’s Peacemaking Bid
Austrian Parliament members walk out when Volodymyr Zelensky begins speaking.
Father obliterates council members following viral TikTok of biological male masturbating in women’s bathroom..
Tsai Ing-wen received a "warm welcome" from the Chinese people in the US.
EU's von der Leyen: "We know this is an era where we rely on one single supplier. China. 98% of our rare earth supply."
China and Brazil have signed a new deal that will allow them to trade in their own currencies, bypassing the US dollar as an intermediary
Elon Musk and Others Call for Pause on A.I., Citing ‘Profound Risks to Society’
“We've had evidence prior to the pandemic that masks were largely ineffective at preventing community transmission of influenza “
Former Starbucks CEO Howard Schultz:
Former Starbucks CEO Howard Schultz rejects being labeled a "billionaire"
Jamie Dimon is being deposed over JPMorgan Chase role in Epstein lawsuits
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
Social Media censoring users for saying the true
Smart Iranian fashion designer teaching dummy TV anchors lesson about reality
AMERICA, 2023
U.S. charges FTX's Bankman-Fried with paying $40 million bribe
Fallen 'Crypto King' Who Owes Millions to Investors Was Kidnapped and Tortured
Regulators blame social media for SVB's rapid collapse: 'Complete game changer'
AOC explains why she opposes banning TikTok
Singapore’s Prime Minister says China and US need to stabilize relations because world can't afford a confict between the two superpowers
In a dramatic U-turn against His Government: Judicial Reform Legislation Must Be Halted, Says Israeli Defense Minister Yoav Gallant
Gordon Moore, a co-founder of Intel Corporation, died at 94
Powell: Silicon Valley Bank was an 'outlier'
Bordeaux town hall set on fire in France pro democracy protest
Police violence in Paris
Paris: Some of the police are stepping down and showing solidarity with the protesters.
Donald Trump arrested – Twitter goes wild with doctored pictures
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
The US government has charged Chinese businessman Guo Wengui with leading a $1 billion fraud scheme that cheated thousands of followers out of their money.
Credit Suisse to borrow $54 billion from Swiss central bank
The BBC problem about China
Russian Hackers Preparing New Cyber Assault Against Ukraine
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
If this was in Tehran, Moscow or Hong Kong
Announcing GPT-4
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
A brief banking situation report
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
Saudi Arabia has announced a major breakthrough in diplomacy with Iran after two years of intense talks
×