China Luxury Sales in Big Slump

China's slowing economy affecting global luxury brands

Another sign that China's economy is weakening further -- the sales of luxury goods continues to slump, affecting brand name companies' bottom lines by as much as US$200 billion.

Burberry and Hugo Boss have issued profit warnings, while Richemont has seen a 27 percent drop in sales in China, Macau and Hong Kong, as Chinese consumers stop shelling out for big-ticket items.

Middle-class consumers aren't spending as much

Consultancy company Bain says China accounted for 16 percent of 362 billion euros (US$393.8 billion) of global luxury spending last year.

But this year the country's economic growth in the first quarter was slowed by the property slump and job insecurity. There are no signs things will get significantly better in the second half of the year.

Bain predicts this year will be the weakest for the global luxury market since the pandemic, as China's super rich are avoiding flaunting their wealth for more discreet fashion.

That said, the uber wealthy are still happy to spend, and high-end luxury brands are benefitting, such as Hermes and Brunello Cucinelli.

In early 2023 when China finally lifted its Covid-19 restrictions, Chinese consumers went on a massive spending spree on luxury goods, but that tapered off when the property sector weakened further.

Hugo Boss, Burberry, issued profit warnings

The longer it isn't resolved, the longer the luxury sales slump will continue... and that will have a trickle down effect on other retail and hospitality sectors...