Chanel’s president of fashion, Bruno Pavlovsky, warned the fashion and luxury goods industry to prepare for a challenging year in the face of decelerating global economic growth. Speaking to the Financial Times on the sidelines of the company’s Metiers d’Art show held in Manchester, the UK this week, Pavlovsky emphasized the potential difficulties ahead for the industry.
According to Pavlovsky, economic conditions are currently difficult “everywhere, in every single country,” which is bound to affect the luxury sector.
“Luxury is not protected from the economy. I don’t have a crystal ball, but the situation will be tougher than what we saw in 2023,” he warned.
Pavlovsky revealed that the brand recorded a drop in shop visits and purchases from first-time and occasional buyers this year, linking the trend with high inflation in both the US and Europe and record youth unemployment in China.
According to earlier reports, luxury sales in the US alone rose a mere 2% in the third quarter of the year after stagnating in the previous quarter. In Europe, luxury brands’ revenue growth slowed to 7% compared to 19% during April-June. Commenting on the downturn, Pavlovsky noted that this is “normal” because luxury goods “can’t be in permanent two-digit growth.”
Chanel is not alone in its worry over the luxury industry’s future, with companies from LVMH to Gucci reporting lower sales growth or revenue declines amid inflation and recession worries. For instance, last month, Cartier-owned Richemont reported half-year results that showed a 3% drop in its luxury watch sales globally and a 17% decline in the Americas.
“Luxury is unfortunately not recession-proof,” HSBC analysts wrote in a note to Bloomberg, predicting that the “stellar growth” in sales during the post-Covid-19 pandemic years is likely over.
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