Luxury Goods Showed Overall Positive Growth, But They Had To Be Vigilant Again.

The global economy has entered a turbulent period and has just tasted the sweetness of recovery.

It has to be vigilant again.

With the revival of the industry, luxury goods began to show an overall positive growth in 2017.

In the first half of the fiscal year, the total sales of Kai Yun group rose 26.8% to 6 billion 432 million euros, and the sales of core brand Gucci rose 44% to 3 billion 853 million euros, more than 43% of the same period last year.

LVMH Group sales increased by 10% to 21 billion 750 million euros, net profit recorded a significant increase of 41% to 3 billion euros, during the period, the group's core brand Louis Vuitton strong growth driven leather leather sales sector rose 15% to 8 billion 590 million euros.

In June, 108 years after its establishment, Chanel launched the first initiative to publish the data of last year's earnings, which attracted the attention of the industry and consumers. Its total sales increased by 11% to 9 billion 620 million US dollars, and its operating profit amounted to US $2 billion 690 million.

The reason why Chanel released the data is not only a hint that it will not be sold, but also a response to the industry's view that its products are aging and conservative.

Italy's luxury brand Prada, which has been quiet for 2 years, has improved its performance after a series of innovative measures. In the 6 months ended June 30th, group sales grew 3.3% to 1 billion 535 million euros, net profit rose 10.7% to 106 million euros, and sales increased the highest in Asia Pacific region including China, with an increase of 6.6% to 519 million euros.

It is noteworthy that the major luxury groups mentioned

Positive impact on performance.

According to McKinsey's latest report, Chinese luxury consumers spend more than 500 billion yuan per year, accounting for nearly 1/3 of the global luxury goods market. Among them, China's post-90s generation has become an incremental consumer of luxury goods.

According to the agency, the income growth of China's luxury industry in the first half of this year is between 15% and 20%.

However

It is characterized by rapid change and closely related to the global economic situation.

UBS recently issued a warning that although China is now recognized as the most potential luxury goods consumer market, it is expected that the pace of China's luxury consumption will slow sharply in the second half of this year, increasing from 13% in the first half of this year to 7% to 8%.

This also means that the performance of global luxury brands is again under pressure due to the slowdown in the Chinese market.

In the 2017 report on consumption upgrade data released by China UnionPay and Jingdong, the consumption growth of the 90s population was the fastest, reaching two times the increase of 70, and the average annual consumption increased by 2.7 times in three years. However, another reality behind the amazing consumption power is that the labels of "new poor" and "invisible poor" are still tagging behind the 90's consumers.

In addition, the trend of domestic consumer demotion has become a trend that can not be ignored.

The popularity of low-priced consumer goods, such as the consumption platform represented by many spells and the second-hand trading platform represented by leisure fish, have broken the ideal situation of the expansion of the middle class in China and the upgrading of overall consumption.

Macroeconomic indicators such as the sharp decline in retail sales of consumer goods also support the trend of consumer demotion to a certain extent.

According to the National Bureau of statistics, in May this year, the total retail sales of consumer goods in China increased by 8.5% over the previous year, lower than the expected value of 9.6% and the previous value of 9.4%, the lowest level since May 2003.

In July, the total retail sales of social consumer goods amounted to 30734 billion yuan, up 8.8% from the nominal growth rate. The growth rate was the lowest in the past year, which is only 8.5% higher than that in May this year.

Globally, the "Black Swans" that influence retail sales of luxury goods are also emerging.

The recent US President Trump's trade policy has begun to shake the confidence of the wealthy. Investors are watching closely how long this wave of luxury recovery will last.

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According to the latest news, with the opening of trade war, in addition to levying taxes on products from China, President Trump will also levy taxes on products from France, Belgium and Italy, or will involve luxury brands, but the news does not disclose specific plans for taxation.

Some analysts pointed out that in the trade war, luxury goods and other non essential products are the most easily chosen targets, because levying taxes on this category will not have much impact on the American consumers. The United States has its own luxury brands, and consumers of this category can afford higher prices, but it will further weaken the consumption intensity of Chinese luxury consumers in the United States.

The luxury industry is increasingly influenced by geopolitical and monetary factors. When Trump won the US presidential election as the new president of the United States, European stock market plummeted. Analysts warned that the news may be negative for the luxury industry, but it is positive for the fast fashion industry.

In addition, this year's emerging market turmoil continues to bring uncertainty to the global economy.

According to Bloomberg's latest report, this year's market turbulence has reached the longest time span since the financial crisis. The report quoted Blackfriars Asset Management Ltd. fund manager Tony Hann in London commented that "the motto of investment bigwigs to earn big money is reasonable, but in such a market, resolutely buying, you really need to be courageous."

At the beginning of last month, due to trade frictions with the United States and its own economic structural problems, Turkey mainly suffered heavy losses on the international currency lira, but instead stimulated Turkey to become the cheapest country to buy luxury goods, causing consumers in China and the Middle East to queue up to buy.

However, local luxury brand stores decided to raise prices the next day to stabilize prices.

The collapse of Turkey's lira also has many associated effects, including the euro, the Swiss franc and the yen, which were once pulled down against the US dollar.

The decline in the stock market has exacerbated fears that high-end consumers may tighten their belts.

Luca Solca, head of luxury banking division at Paris bank, said that the growth of luxury goods market in the second half of 2018 or increased by low unit.

After Hermes released its second quarter earnings report, CEO Axel Dumas said the group was closely watching the Chinese stock market and the real estate market, because any change in high-end customer assets could affect group performance.

The performance also made alarm for Hermes. The growth rate of Hermes in the second quarter was only 3%.

According to fashion headline data, Hermes's second quarter sales increased by 7.2% to 1 billion 460 million euros, and the growth rate was 11.6% at fixed interest rates.

Sales growth in the first quarter was 11%, while revenue in the first half increased by 5%, compared with 8.9% in the second quarter of last year and 11.2% in the first half of last year, the growth rate of Hermes has begun to slow down.

LVMH chairman and CEO Bernard Arnault also said in the first half of the year's earnings report that although the demand for global luxury goods is strong, monetary and geopolitical uncertainties still exist, the group will remain vigilant and must further enhance its leadership in the field of luxury goods.

After 10 consecutive quarters of high growth, Kai Yun group's growth engine Gucci will also face enormous challenges on the premise of an unstable global economic environment and high growth base. The Jean-Marc Duplaix, chief financial officer of Kai Yun group, said after the first quarter of this year's earnings release, Gucci should have a slowdown in the whole year.

The economic growth is cyclical. The luxury industry is also just a revival of luxury goods industry, or will be ready to spend the winter, everyone wants to rely on Chinese consumers, but the only thing that can really rely on is the brand itself.