At a meeting with analysts this week, CEO Michael Burke said Vuitton is experiencing “unheard-of growth rates” in China, according to a note from Citi analyst Thomas Chauvet first reported by Bloomberg. The label continues to defy concerns about a slowdown in the market, whose consumers account for about a third of all luxury-goods purchases worldwide, according to Bain & Company, a global management consulting firm.
In January, Jean-Jacques Guiony, chief financial officer of the Vuitton’s parent company, LVMH Moet Hennessy Louis Vuitton, said that most of the conglomerate’s major brands saw spending from Chinese consumers grow by double digits in the fourth quarter of 2018. That same month, China announced that its annual economic growth rate decelerated to its slowest pace since 1990, stoking fears of a downturn throughout the global market.
Still, as LVMH and other companies pointed out, the country’s 6.2% growth rate far exceeds that of most developed countries, and wealthy Chinese shoppers continue to be significant purchasers of luxury goods.
Not all high-end brands have been so lucky, however. On Tuesday, Tiffany & Co. reported disappointing first-quarter sales and cut its full-year profit outlook, citing a steep decline in tourist spending.
“The tourists in the U.S. represent a low double-digit percentage of our total sales in the U.S. and we have seen a sharp decrease to sales to tourists in the U.S. in the range of 25%. Even sharper for Chinese tourists,” Tiffany CEO Alessandro Bogliolo said on a call with investors and analysts.
The Chinese government has changed several policies in recent months to encourage domestic spending and cut down on daigou, the common practice of purchasing goods abroad and reselling them on the mainland to avoid steep import tariffs.
According to the Boston Consulting Group, Chinese consumers purchased $121 billion worth of luxury goods in 2018, or about 32 percent of the worldwide total. This share is estimated to grow to 40 percent by 2024.
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