The Sales Of Luxury Brands In The UK Area Increased By An Average Of 4.5%.

In May of this year, Britain

The price is about 14% cheaper than the global average, but it is less than three months from now, which is about 20% lower than the global average.

Britain's Euro Brexit is making the UK a paradise for global luxury buyers. When the exchange rate fluctuates, luxury brands around the world will also face the problem of re pricing.

In June 23rd, the Bank of England Exane BNP Paris bank said in a report this Wednesday that the British pound fell 10% to its lowest level in 31 years. In fact, Britain has become the cheapest luxury in the world.

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This news seems to be good news for the British luxury brand Burberry struggling in Asia, but it is a heavy blow for its main competitor, LVMH group.

LVMH group lost its revenue in the first half of this year to London due to some French tourists. In the first half of the year, the French market accounted for only 10% of the group's total revenue. The group's main luxury brand Dior fell 30% in the first 6 months of this year. The decrease in Paris tourists has been reduced.

Worried.

In June this year, Exane BNP announced the joint use of the Bench Marque global luxury pricing tool with Deloitte to issue the global luxury goods cross-border price gap and price trend in each quarter.

At present, the average price of luxury goods in China is about 20% higher than the global average, while the price of Italy is 17% cheaper than the global average. The price of American luxury goods is between Europe and Asia.

"In May, luxury prices in the UK were about 14% cheaper than the global average, but now they are 20% less than the global average in May," said Luca Solca, executive director of the global luxury department at Exane BNP, Paris.

The report points out that in the short term, at least until the Brexit is formally finalized, the price of luxury goods in the UK will be greatly related to the large influx of tourists to British consumption and exchange rate fluctuations. The relatively high prices in the French market and frequent terrorist attacks will trigger a consumption boom in the UK.

Analysts revealed that the sales of luxury brands in the UK area increased by an average of 4.5%, of which Burberry and Hugo Boss were the most obvious. The report predicted that Burberry's flagship store in London would grow strongly in the second half of the year.

The Exane report also showed that after the occurrence of Brexit, the sales performance of HUGO BOSS regional stores in the UK increased by 6%, but organic growth was offset after the performance was converted into euros. Other brands including Mulberry, Jimmy Choo, Church's and Stella McCartney also had the same situation in the British regional stores.

The impact of sterling exchange rate on brand performance depends on how the group will manage price differentials among different regions.

For example, according to Deloitte data, the average selling price of Mulberry before the collapse of the pound was $812, slightly higher than the $797 price of the brand in the UK area.

As for Burberry, its global price difference is 46%.

Burberry Carol Fairweather, chief financial officer, said last month: "because of the depreciation of the pound, the profit of Burberry 2017 in the fiscal year is expected to be 90 million pounds, which is 119 million dollars at current exchange rate, higher than the group's expected 50 million pounds in May this year, or 66 million dollars."

After the Burberry first quarter financial report was released, Carol Fairweather said in a telephone interview: "we have a global pricing strategy. The group does not intend to adjust the price immediately because of exchange rate fluctuations.

Although the depreciation of the pound is obvious now, the group thinks that it is appropriate to adjust the price after the final decision is made.

The LVMH group also takes a wait and see attitude.

Group chief financial officer Jean-Jacques Guiony said last week that the main brand Louis Vuitton of the first half of LVMH did not adjust the price of the British region after the Brexit incident.

LVMH group's second quarter sales increased by 2.2%. Jean-Jacques Guiony pointed out after the publication of the earnings report: "the global environment is quite challenging. Especially during the period of exchange rate fluctuations, we do not take immediate measures to adjust prices, which do not mean that we have no control over prices, but that the group should take a long-term wait-and-see attitude towards exchange rate fluctuations."

RBC Capital Markets luxury brand analyst Rogerio Fujimori believes that because the Chinese government has recently encouraged a series of measures to encourage domestic consumption, including raising tax standards for overseas shopping, whether the low pound will stimulate Chinese tourists to spend in the UK remains to be seen.

In a luxury report released on Wednesday, he also pointed out: "from a long-term and tax perspective, the brand should create a more equitable competitive environment for Chinese tourists in their domestic consumption, which will help alleviate the pressure on the luxury market caused by the regional price gap."

At the end of the report, Rogerio Fujimori concluded: "in this context, the best performing luxury brands in the second quarter of this year, such as Hermes and Gucci, have clearly won the favor of most local consumers."

In the reported earnings data, Hermes group's second quarter handbag leather products sales maintained a strong growth of two figures. Kai Yun group's net profit growth in the first half of this year was close to double-digit 9.9% to 465 million euros, and its brand Gucci performance was fully recovered.