Discuss Some Issue of Personal Local or National Concern and Its Importance to You

Topics: LVMH, Gucci, Luxury good Pages: 2 (672 words) Published: October 4, 2012
China luxury battles shifting tastes

China's luxury shoppers are shifting away from flashy labels toward more subtle designs, according to an HSBC report. NEW YORK (CNNMoney) -- At first blush, it looks like luxury has a China problem. After a blockbuster 2011, major upscale brands Burberry and Louis Vuitton recently shook up this rarefied world by reporting a slowdown in their China sales. But the China luxury story is murkier than it appears. That's because sales remained strong at key fashion rivals Prada (PRDSY) and Hermes (HESAF), both of which expect the momentum to continue for the rest of the year. Retail experts say a shift in the Chinese shopper might be behind these mixed signals. Chinese consumers are becoming "more sophisticated" in their tastes, and that can hurt overtly luxurious brands, according to a report by HSBC's head of consumer brands, Erwan Rambourg. "A few years ago, it was common for Chinese men to leave the label sewn to the sleeve of their suits so that people knew what brands they were wearing," Rambourg wrote. Now, he says, these same buyers are moving into more subtle, albeit high quality, designs. Paris-based luxury brand conglomerate PPR is a good example of this split. Its in-house brand Bottega Veneta sells leather goods without overt logos. Bottega sales soared 62% in the first half of this year. PPR's other brand Gucci, with its prominent "G" label, had a strong 17% increase in sales, but it paled in comparison with its other in-house brand. The trend hit other well-known brands particularly hard. Burberry Group PLC (BBRYF), purveyor of the easily identifiable classic check trenchcoat, issued a profit warning in September. LVMH (LVMHF) Moet Hennessy Louis Vuitton, the world's largest luxury goods group and owner of the famed LV brand, reported its slowest quarterly growth since 2009 this summer. Each company cited China as a reason for its weakness. Analysts are already taking note of the shift in China. Rambourg cited...
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