FAST FIVE: Covid-19 Triggers Global Luxury Bust

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The luxury fashion industry is suffering its most significant “shock” since the 2008 financial crisis, reported the Financial Times.  Our angle in this piece is to asses which luxury brand companies are most exposed/dependent on China.

Many of these firms have complex operations in the country, from manufacturing facilities to brick and mortar stores to e-commerce platforms.

If consumption remains depressed, then luxury exports to China could drop by a whopping $250 million in 1H20.  A top executive at Shanghai's luxury shopping mall Plaza 66 said the mall had been deserted this month.

Stores such as Cartier and Tiffany's have been shuttered.  “We are now, brand by brand, reallocating that inventory to other regions in the world so that we are not too heavy in stock in China,” Kering chief executive François-Henri Pinault said last week.

Brands that have manufacturing and retail exposure to China will be damaged the most.  UBS analyst Olivia Townsend said luxury brands she spoke with said factories are to remain shut for all of February may lead to product shortages.  The demand crisis comes as the global apparel industry rolls over suggests that world stocks could be headed for a correction.  Tyler Durden Sat, 02/22/2020 – 09:48.

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