Luxury Market: China'S Weak Market Is A Big Problem.

The weakness of the Chinese market is a big problem for companies like Coach, according to the fortune magazine.

Its business in the United States is experiencing a major downturn, and sales in the 2014 fiscal year dropped by 20%.

The company expects the annual sales in the Chinese market to increase to $600 million in fiscal year 2015, accounting for 14% of total sales in the fiscal year.

Therefore, if the weakness of the previous quarter in the Chinese market continues, sales will continue to decline compared with sales (after the impact of new or closed stores), which is unbearable for Coach.

Considering that Chinese consumers are more keen on overseas shopping preferences, the depreciation of the renminbi will bring a double blow to luxury brands.

Last week, Coach said that the reason why the Japanese market was booming was largely due to the influx of large numbers of Chinese tourists.

The German fashion brand Hugo Boss said in its performance report statement that in the first half of this year, the company's performance in Europe was driven by tourism consumption of Chinese tourists, which grew by more than 50%. Italy was also a success in doubling its turnover.

Chinese consumers now surpass Russian tourists and become the main force in promoting European brands.

Ralph Lauren also talked about the changing status of tourists in the conference call. Robert Madore, the brand's chief financial officer, said: "we find that the rate of arrival in European and Japanese markets has increased significantly, while the US is decreasing.

Our European performance has increased by two digits.

The negative impact of foreign exchange on income growth is about 500 basis points. "

No matter how the exchange rate is, the pain to the company is the same.

In a recent quarterly report on the global market, Gildan Sportswear said that the negative impact of the exchange rate on the company was as high as $10 million.

AVON's quarterly revenue fell 0.17%, diluted by 15 cents per share.

Neiman Marcus said in the S-1 document that the net income for the first quarter ended May 2nd was $19 million 800 thousand, but the company suffered a loss of $15 million 700 thousand against the exchange rate and the total revenue was reduced to $4 million 900 thousand.

Although it sounds like all companies are being affected.

L'OREAL, however, seems to be on the edge of the competition. The brand said in its performance report that "9.7% positive money has affected 14.7% turnover."

The weakness of the euro has given the company the advantage because the company's turnover comes from a strong dollar zone.

Tod s said in its earnings call conference that the company's turnover increased by 7.9% in the first half of 2015 due to positive exchange rate fluctuations.

If it is not for exchange rate gains and hedging contracts, turnover will only increase by 1.8%.

Kai Yun group also emphasized the impact of this change. In its earlier performance report, it pointed out: "the change of the RMB exchange rate has greatly promoted the development of the tourism industry.

For Gucci, the United States is local.

More contributions to performance, and less contribution from tourists.

Because of the strength of the US dollar, Chinese and American tourists are more willing to spend in Europe.

And struggling with its hedging initiatives.

Group growth of 13% was offset by the positive exchange rate effect.

The company said in its earnings report: "most of the conversions took place this year due to the hedging pactions implemented by the company last year, which means that our turnover and the profits of all the subsidiaries in the world will be converted into euros, which is why we have achieved an additional 14.5% turnover and profit growth."

Looking forward to the future, many fashion and beauty companies believe that the issue of RMB exchange rate will ease in the second half of the year.

Most people say that even if the euro continues to be weak, commodity prices will soon reach the upper limit.

Moreover, the rise in commodity prices in Europe may eliminate consumers' psychology of looking for bargains.

However, if the US raises interest rates by the end of 2015, it will lead to a stronger dollar and a further decline in the euro.

Authoritative analysts predict that the continued weakness of the euro, the current luxury price of luxury brands in Europe may not be enough, and may continue to rise in price.

It is noteworthy whether the renminbi will further depreciate significantly.

In the past, luxury goods in China only worried about the impact of anti-corruption, and now they have a headache, that is, the exchange rate.