Two Luxury Goods Giant Q1 Revenue Decline Live With Goods Accused Difficult To Break The Dilemma

The luxury industry is experiencing the coldest winter in history. Recently, LVMH group and Kai Yun group have disclosed the first quarter performance report 2020, the two largest luxury goods giants in the first quarter revenue fell 15% and 15.4% respectively.

Although luxury companies have started to save themselves, including cutting costs, and trying to deliver live goods in the Chinese market, in the eyes of the industry, this is just a drop in the bucket.

"The downturn in the luxury sector in 2020 is inevitable." In March 22nd, AI media consulting CEO and chief analyst Zhang Yi said in an interview with reporters: "according to the current global new crown development situation, the two or three quarter data will be even more ugly."

The latest report released by Kai Yun group in April 21st showed that in the first quarter of 2020, the group's total revenue reached 3 billion 203 million euros, down 15.4%, up 21.9% in the same period last year. Among them, the sales of its core brand Gucci fell 22.4% to 18.04%, while the sales of another core brand Saint Laurent fell 12.6% to 434 million euros.

Prior to April 16th, LVMH group also released the first quarter results, the report showed that the group's revenue fell 15% to 10 billion 600 million euros, which is the first decline in nearly 10 years. Among them, the relative decline in the core sector leather clothing revenue fell 9% to 4 billion 643 million euros, watches and jewelry department revenue fell 24% to 792 million euros, the quality retail sector fell 25% to 2 billion 626 million euros.

The crisis in the luxury industry has also spread to other sectors of the industry chain. Niemann Marcus group, one of the largest luxury retailers in the United States, was reported to have been in talks with banks in April 20th for bankruptcy protection. Prior to that, the group has been forced to close more than 60 stores, and let about 14 thousand employees pay a vacation.

And that may just be the beginning. Bain consulting expects that the size of the luxury market will shrink by 15% to 35% in 2020, and the annual loss is estimated to be between 60 billion euros and 70 billion euros. Forbes even predicted that the health event would erase the profits of luxury goods in the international market in the past 5 years.

"To see the development of the epidemic, I think the luxury industry is going to be hard to recover this year. Many people buy luxury goods or are willing to go to offline stores, and feel the workmanship and details of the products, so the epidemic is very damaging to the entire luxury industry. " A.J., editor of the luxury industry watchdog and watchmaker, told reporters.

In AI media consulting CEO and chief analyst Zhang Yi, it seems that whether there will be industry shuffling, with the past profits accumulation of enterprises, the distribution of profits and the degree of ownership concentration. He said: "generally speaking, the profits of the top luxury enterprises in the past few years are relatively substantial, and the cash reserves of enterprises are adequate, and it is possible to survive the difficulties of the year. If the allocation of shareholders leads to insufficient cash reserves, the consequences will be quite serious."

In the face of enormous difficulties in the industry, many luxury groups began to save themselves and save themselves. Francois, chairman of Kai Yun group, said that from April 1st to the end of the year, it will reduce its fixed wage by 25%. The group also said it had implemented a preliminary action plan to adjust the cost structure and reduce the demand for working capital.

Bernard Arnaud, chairman of LVMH group and all members of the board of directors, also decided to abandon the salary in April and May and reduce the attendance cost of board members by 30% in 2020. In addition, the group has decided to reduce its dividend in 2019 by 30% and reduce its capital expenditure by 40% this year.

In addition to frugal and self saving, luxury brands in the past have begun to accelerate the pace of digital marketing and expect closer proximity to consumers in a more intimate manner. In March 20th, Armani group's luxury brand Giorgio Armani Tmall official flagship store opened. In addition, many luxury brands such as Cartire and Prada have landed on Tmall since 2020.

As the draught on the draught, the live goods are also targeted by luxury brands. In March 26th, Xiao Hong published the news that LV presented the first live show on Xiaohong book.

However, the live broadcast of LV's "down to the world" is not only ideal but also unmercilessly tucking out the netizens. It is considered to be strange in style, too "rustic", and the top selling cards are like selling stalls.

In response, Zhang Yi said, according to AI media consulting and research data, not all commodities are suitable for direct seeding electricity providers: the price is not suitable for the popular level, the products which are mainly consumed by men are not suitable, the products that are too transparent are not suitable, and the products that have no imagination in product performance or efficiency are not suitable.

"For large luxury brands, they are generally reluctant to lower their value for live broadcast activities. They may feel that they may damage the brand image. Now it is because the epidemic is not able to carry out large-scale activities and can only be forced to broadcast live. After the end of the epidemic, there may be a small number of brands that will continue to use live broadcasting for some promotion or take delivery because of their own tonality, or if they do bring some revenue before the live broadcast. But overall, direct seeding should not be a development direction for luxury goods in the future. A.J. says.