By Mimosa Spencer
Source: www.reuters.com, April 2023
PARIS, April 13 (Reuters) – Luxury shoppers in the United States are curtailing purchases of high-end fashion and leather goods, LVMH’s (LVMH.PA) first-quarter sales report showed, adding to evidence that a strong, months-long, post-pandemic splurge may be ending.
Shares in Europe’s most valuable listed company rose nearly 5% to record highs in early trade on Thursday after it reported a 17% jump in sales, thanks to a sharp rebound in China following the end of COVID-19 lockdowns.
U.S. revenue grew 8% over the quarter but the French group’s finance chief Jean-Jacques Guiony said most of that was down to brisk business at its less exclusive Sephora beauty chain.
“For the rest, the business is slowing down a bit,” he said, citing softer demand for fashion and leather goods – where sales to U.S. shoppers both at home and abroad were “flattish” – as well as jewellery.
“Maybe interest rate rises are taking their toll on spending,” Guiony said.
European labels including LVMH’s Louis Vuitton and Dior, as well as Chanel and Hermes have been riding a wave of strong demand from Americans, who emerged from lockdowns with savings and a desire to splash out on designer labels.
LVMH’s U.S. sales grew 15% last year, and the U.S. market accounted for 27% of overall revenue, as shoppers shrugged off rising prices and turbulent markets.
High demand prompted a flurry of investments, with brands including rivals Hermes (HRMS.PA) and Kering-owned Gucci (PRTP.PA) opening new retail spaces in sprawling malls like American Dream in New Jersey and South Coast Plaza shopping centre in California, and in cities like Austin, Texas.
But the spending spree from shoppers is beginning to show signs of slowing.
Credit card data from Citi released this week showed that U.S. luxury spending in March declined to the lowest monthly rate in nearly three years, down 18% as fewer people splashed out on high-end goods.
Younger shoppers, who drew on savings during lockdowns are now under more pressure from rising prices than older generations with higher incomes, Citi analysts said.
