Anujin Todbayar’s Post

'LVMH Results Spell Trouble for Luxury Sector 🚨💎 Fashion revenue at the Louis Vuitton, Dior and Loewe owner fell 5 percent in the third quarter, badly missing estimates. 😧📉 #LVMH #LuxuryMarket #BusinessNews For more insights, visit ➡️databoutique.com – the largest source for public data in retail. 📊👀💡#DataBoutique #RetailTrends by The Business of Fashion about Louis Vuitton

Alright, LVMH group released its H1 2024 results yesterday. The group missed earnings by a meagrely 1%. In a world where we want growth all the time and expect the Blue Chip names like LVMH to set the tone, them missing sales and net profit estimates is seen as huge. I have been reading some articles saying the "Good Days for Luxury are Over". I will try to debunk this myth and sensational headlines. First, let us look at the immediate issues: 1. China has slowed down - not only for LVMH, but for Hermès, Kering, Richemont. Every luxury group on the planet. China is a black box, there are certainly signs that the Chinese economy may be slowing down. Interesting things to note though - LVMH Asia ex. Japan revenue went down by 14% in Q2 2024,. But guess what, Japan sales rose 57% during their period. 🙆♀️ The favourable exchange rates including YEN is causing this shift to "buy from Japan" Phenomenon 2. Price hikes - All luxury brands have gone on an overdrive when it comes to prices hikes. I know a thing or 2 about watches. An IWC Schaffhausen Pilots watch has more than doubled in Price in the past 5 years. A Jaeger-LeCoultre Reverso steel has gone up 2.5x in the past 6 years. I can name brands in leather goods (Hermès ++). Similar sights everywhere. High prices are starting to hurt. Most definitely. Watches and Jewellery is down 19% by the way!! 3. 1% revenue growth with ~8% price increase means if there were no Price hikes, the sales is 7% down. essentially, compression on Volumes. 4. Challenging Geopolitical environment and certain expectation of slowdown causing customer to exercise caution and delay purchases Now, WHY I think this is a passing phenomenon and that Luxury is still in good stead if they were to do the following, and some of the following were to come to reality: 1. UBS global Wealth Report - 9TR USD worth of wealth is going to be transferred to women within the next few years (Horizontal wealth Transfer). Millennials are going to inherit 84 TR USD in the net 2-3 decades. These are great signs in terms of sheer buying power in the hands of the right kind of consumer 2. Brands should get their act together when it comes to ESG. A recent raid by the Authorities in Italy revealed sweat shops being run outside Milan, these concerns around wages, quality of materials used, and a lot more need to be quelled by the brands 3. Price Hikes - Yikes. Simple, just control the price Hikes for god's sake! Just because COVID was a time when people were home, didn't travel, or spent on food and other experiences, all their money went to buying luxury goods. That phenomenon is over. Brands need to get back to Volume increases in the next result cycles. Over reliance on price Increases is dangerous #lvmh #richemont #luxury https://lnkd.in/d_wQPuey.

The Economic Struggle of Luxury Brands Luxury fashion brands, including Burberry, Hugo Boss, Swatch Group, and Richemont, reported disappointing earnings for the first half of 2024, with significant sales declines in Asia and the Americas. Burberry's and Hugo Boss's shares dropped sharply, with both companies issuing profit warnings after reporting substantial declines in operating profits. The sector's reliance on China, which faces economic challenges like slowing GDP growth and rising luxury return rates, has exacerbated the industry's struggles. LVMH, Kering, and Hermes are set to release their earnings soon, amid an overall 30% decline in the S&P 500 Textiles Apparel & Luxury Goods Index. However, Miu Miu remains an outlier, experiencing significant growth driven by popularity in Asia and younger markets. Source: Park, A. (2024, July 23). Luxury fashion is struggling in the first half of 2024—Here’s why. | Forbes.

A recent report from LVMH highlights a significant slowdown in Chinese demand, raising concerns about the luxury industry's growth prospects. Sales in the Asia region (excluding Japan) dropped by 16%. While LVMH maintains that there is still an appetite for luxury goods in China, recent economic changes have made consumers more cautious about spending on designer brands. In contrast, the U.S. luxury market is projected to generate approximately $126 billion in 2024, making it the largest sector for luxury brands. Despite a recent 8% decline in sales due to economic uncertainty, the market is expected to recover. Luxury fashion is anticipated to reach $115.9 billion, while luxury leather goods are projected to generate $79.36 billion in the same year. How do you see consumer behavior evolving in the luxury sector over the next few years? #Luxuryretail #Highstreet #RetailLeasing #CBRE #SouthFlorida #LVMH #DesignerBrands #MultiMarket #RetailExpansion

#fashion phenomenal growth fizzle out. Why? Brands tried to sell #luxury perception when no true luxury feeling was around. There is a long list of brands and groups that will be heavily impacted. Lessons to learn: - Luxury fashion is an oxymoron - Elevation is a joke - China was a shortcut for short term gain - Consultancy firms vision is a failure - The Creative Director never makes the difference alone - Serious professional approach is lacking We will see this week with LVMH, Kering and Hermès results

The dangers of over-elevation. Favorite buzzword in fashion and beauty boardrooms, elevation is to be handled carefully. The Business of Fashion describes how Burberry has being straying too far in pursuit for it. Equally, many luxury brands also see their prices heavily questioned and now face slower sales. In the end, they blame China’s slow-down ...which is so much easier than acknowledging a strategic faux-pas. In fact, over-elevation disrupts a key part of the mix: the VALUE. This fine balance of quality, desirability, function and price is essential for purchase intent and conversion. Rather ironically, Chinese consumers are world-masters at recognizing this balance. Today, winning Brands are often the ones either delivering the right value (E.L.F. BEAUTY, Ralph Lauren, JACQUEMUS, Sézane, Sol de Janeiro as examples) or showcasing quality (Loro Piana and Hermès) on top of an authentic story-telling. Also interesting to notice: Burberry Beauty saw its value mix refined by Coty and is now much more successful than when it was under the full control of the Brand.   Time for all to assess strategies as the hangover of over-elevation will be lengthy and painful. #luxury #fashion #beauty #price #value #china #mix #elevation #marketingbasics Read more:

LVMH usually kicks off luxury earnings season on a reassuring note. Not so this time. The conglomerate reported its fashion and leather goods business grew just 2 percent in the first quarter. Worryingly, sales in Asia excluding Japan – a barometer of Chinese luxury demand – slipped 6 percent from the same period last year. The results confirmed that not even the biggest brands are immune to the global luxury slowdown, and that the industry hasn’t yet found a clear alternative for growth if inflation in the US continues and China’s economy continues to sputter. This week, we’ll get several different perspectives on the shape of the luxury market, from brands at high and low ebbs, and across the pricing spectrum (within reason, this is still luxury after all). Can Kering clear its own low bar? Will Prada defy the China slowdown? Are Hermès’ ultra-wealthy customers still immune from the economic cycle? Read more below.

One company that has stood out from the rest of the luxury fashion brands is Miu Miu. An interesting article on Miu Miu able to deliver a sterling performance in a challenging luxury market. Luxury companies, including Gucci, Watches of Switzerland, and LVMH, have been facing challenges due to an economic downturn in China, resulting in decreased demand for luxury goods. However, Miu Miu, an Italian fashion giant, has been an exception to this trend. Miu Miu reported an impressive 89% growth in first-quarter sales and topped the Lyst index, a quarterly ranking of trendy fashion brands. The brand's success can be attributed to its effective use of social media, particularly TikTok. Its micro-mini skirts for Spring/Summer 2022 became a viral sensation on TikTok, leading to a surge in demand and boosting sales. The company has successfully targeted a younger demographic, particularly Gen Z in China, through its "Miu Miu girl" branding. The brand has enlisted popular Thai and K-pop stars as brand ambassadors, resonating with the desired image of a younger, rebellious intellectual persona. The company's success in tapping into Chinese fashion trends and reflecting what's on trend has contributed to its growth. However, Miu Miu acknowledges the challenges in the market environment and emphasizes the need for flexibility, agility, innovation, and investment to respond to evolving industry dynamics. Overall, Miu Miu's success is a result of its effective branding, customer loyalty, and ability to adapt to market trends, particularly through social media platforms like TikTok #miumiu #italianfashion #luxuryfashion #strategy

This month’s fashion, luxury and lifestyle round-up from our retail team, led by partners Matthew Martin and Gavin Stenton, reviews the major stories, trends and developments from across the retail sector in February. French luxury group Hermes has moved into 2024 on the back of better-than-expected profits of around €4.3 billion in 2023 – an ‘outstanding’ result, especially given that some of its luxury counterparts have faced dwindling sales. Could some other brands, such as LVMH, however, be starting to stage a comeback? Meanwhile, following on from mixed results over the festive period, and despite traditionally high sales in January, British retailers confirmed that sales growth slowed last month, with increased cost of living, transportation strikes, and poor weather conditions all cited as factors. Also in focus is the potential for retailers to capitalise on US sporting extravaganzas such as the Super Bowl, and the (possibly controversial) rise of digital designers at London Fashion Week. Read the round-up in full here: https://lnkd.in/e4n7aX8u #retail #retaillaw #fashion #luxury #retailers