Is Your Luxury Brand A Hot Commodity Or A Container?

In today's sluggish luxury market, whose performance has grown, it has already won.

Recent data show that the performance of many big brands continues to decline, but some young innovative brands have grown.

According to the first half of 2016 earnings report: Prada continues to bottom; LVMH has a negative growth; Kai Yun and Hermes group's brands have gone up or down.

For these

Brand, the Chinese market, with 29% of the global luxury consumption share, has become an important battleground in the world.

"On the one hand, consumers are becoming smarter, personalization and diversification are becoming more and more obvious. They are no longer limited to a big brand consumption. On the other hand, there is a trend of multi polarization in Chinese market, and more and more high-end, niche and custom brands have entered the Chinese market, which has changed the market competition pattern."

For the Chinese market, Zhou Tingru, President of the Institute of wealth quality, is a summary.

The times weekly reporter tried to clarify the development of the luxury market in 2016 by consulting the performance of the representative luxury brands.

Italy's luxury goods group Prada (Prada) has the worst performance, both in terms of share price and performance.

August 2016.

JP Morgan announced that it lowered the target price of Italy luxury group Prada2016/2017 in fiscal year, from HK $27 to HK $24.5, with an adjusted amplitude of nearly 10%, while maintaining its neutral rating.

In fact, Prada has been repeatedly lowered target price by JP Morgan chase.

In the 2015/2016 fiscal year ended January 31, 2016, Prada net profit fell to its lowest level in the past 5 years - 330 million 900 thousand euros, a sharp decrease of 26.9% compared with the 2014 fiscal year.

Its share price has plummeted 40% in the past year.

According to UBS data, wholesale business increased slightly by 0.5% in the first half of Prada.

This slightly increased business is mainly benefited from Prada expansion business to e-commerce platform Net a Porter and mytheresa.com.

The continued weakness of Prada over the past two years is mainly due to its poor performance in the Asia Pacific market, especially in the Greater China region.

As one of the most popular luxury brands, Prada has been exposed to over exposure in recent years. Data show that in 2015, Prada group closed at least 11 stores in the Chinese market.

Due to the weakness in the luxury sector and the decrease in the number of visitors worldwide, Prada will be more pessimistic in 2017, down 7%, and 11% and 10% in 2017 and 2018, respectively.

In order to save the downturn, Prada began to try to repair the overexposure of the brand and reduce the number of shops to be renovated in the mainland and Hongkong. A group spokesman said that in the next two years, the group will optimize its retail network, rationalize its inventory and close or narrow the shops that are not profitable.

The half year performance of LVMH, the world's largest luxury goods group, continues to decline amid a steady trend.

According to its latest first half financial report, as of June 30, 2016, LVMH Group recorded both revenue and profits continue to slow down, revenue rose 3% to 17 billion 200 million euros, operating profit basically unchanged from last year, maintained at 2 billion 960 million euros level.

The group's fashion leather Department revenue and profit both slipped by 1% and 2% respectively.

Fashion leather sector revenue accounted for 35.5% of the LVMH group, the decline in profits is undoubtedly a major blow to the group. Not only that, its brand Christian Dior operating profit dropped by 30.2%, but DKNY was also sold because of poor performance.

For such a performance, Citibank analysts have predicted that LVMH may also sell the Marc Jacobs, a luxury brand to young people.

Previously, LVMH had high hopes for Marc Jacobs, hoping to learn from the successful experience of Michael Kors light luxury industry and spin off the independent listing. However, the development of the brand runs counter to the hope of the group.

In this regard, LVMH chief financial officer currently denied that he will sell Marc Jacobs, and said that the long-term value of the brand.

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Luxury group is not a slump. Although its Bottega Veneta brand is not performing well, its brand Yves Saint Laurent has reached 109 million euros, up 80.2% from the same period last year.

Gucci, which once struggled with Prada and was on the edge of profit, was fully recovered. It showed an accelerating trend in the second quarter of this year, and sales recorded a strong growth of 7.4%.

Operating profit rose 7% to 536 million 900 thousand euros in the first half year.

After repositioning, Gucci is no longer as old as it used to be, but with a lot of bright colors and fresh designs.

Gucci hopes to attract more new consumers once again, especially in the pursuit of freshness and social media. The brand also expands its product line to entry-level leather goods, jewelry and scarves.

In the first three months of the end of June, the group achieved 1 billion 249 million 700 thousand euros in revenue, slightly better than the market expected 1 billion 230 million euros, up 6.2% over the same period last year.

Luca Solca, a bank analyst in Paris, France, believes that the move of Hermes to increase handbags may weaken the pride of its brand and narrow the gap between Louis Vuitton Louis Weedon and other super brands such as Chanel and Chanel. But he also points out that such a strategy helps the group maintain growth momentum under the overall difficult current situation of the industry.

The continuous rise in sales in mainland China has promoted the annual sales growth of Hermes in Asia, excluding Japan, by an annual increase of 6.7%, while Japan has slowed down significantly.

The enthusiasm for buying grew sharply from 12.6% in the first quarter to 7.3%.

Affected by the local and European markets, the Hermes group pointed out that during the period, the 14% domestic sales of the French market did not improve, while the European market also saw no significant growth.

Hermes is still one of the fastest growing luxury goods companies in the world so far. According to a report by DDT CPA, Hermes is leading many luxury brands in its ratings of brand resonance and value.

For many luxury goods groups, the mainland market has some good news.

The depreciation of the renminbi has restrained Chinese consumption overseas, and has also driven the recovery of luxury consumption in the mainland of China.

However, the challenges of Hong Kong and Macao businesses are still great. At present, many luxury group reports show that the Hongkong market is still not improving. The retail industry in the first half of this year has plunged by 10.5%.

In the first half of 2016, the French security problem led to a decrease in the number of French tourists. The terrorist attacks in nice caused more than 80 deaths, which further deepened the fear of foreign tourists traveling to Europe.

Analysts expect that the attack will make tourists do not want to come to Europe all summer, especially France.

At the same time, Britain's European economic situation has been unstable because of these reasons, which made the development environment of luxury goods industry difficult in the first half of the year.

Since 2015, the major luxury brands have started.

Price adjustment, narrowing the price gap at home and abroad, is also preparing for better innovation and development of e-commerce business.

"The rapid development of the Internet in the luxury industry has brought about structural changes in the whole industry.

So they must quickly change the global business model, so the short-term performance decline is relatively large, "said Zhou Ting, President of the Institute of wealth studies.