Chinese weakness may be more than a blip, warns Burberry
Luxury goods have dipped after a clampdown on conspicuous consumption by officials keen to curb corruption
Laura Chesters is a business reporter and covers the consumer, food, drink and luxury goods sectors on the business desk at The London Evening Standard, i, The Independent and The Independent on Sunday
Monday 07 October 2013
Burberry chief executive Angela Ahrendts sent a tremor across the luxury goods world today as she warned that the slowdown in demand from Chinese consumers could turn out to be more than a blip.
Her comments, to the French newspaper Les Echos, came at the peak of "Golden Week", the national Chinese holiday which is one of the most important sales weeks for luxury goods retailers as tourists from the country hit the West End.
Shares in Burberry fell 30p, or 1.8 per cent, to 1598p. Rivals - luggage-maker LVMH, Swiss watch group Richemont and silk scarves designer Hermès - were also all down between 1 per cent and 2 per cent.
Ahrendts, pictured, who first warned that the pace of growth in China was slowing a year ago, said: "This Chinese slowdown that we saw last year was maybe not a temporary accident but a new norm."
She added: "We have been very transparent on China, explaining that our sales there have been slowing down. But... we have done better than we had been expecting." Ahrendts said there were still 30 "flagship" cities in China each on the scale of Paris or London.
China expects to report economic growth of 7.5 per cent this year, stronger than most economies but the lowest for the country for 23 years. Luxury goods sales have also been hit by a clampdown on conspicuous spending by officials keen to curb corruption. Ahrendts pointed to other growth regions in the world including Indonesia, which she said could become the new China.
London-based luxury consultant Claire Adler said: "While some parts of the Chinese market have reached saturation point, thousands of Chinese shoppers in London this week for Golden Week prove that the mood in London remains overwhelmingly upbeat. A large proportion of this is due to Chinese high net worth clients."
Adler added that 83 per cent of visitors from China claimed shopping is their favourite activity.
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