The polarization of luxury goods is serious. What skills should future "super winners" embrace?
Most luxury giants are still showing strong growth momentum.
According to McKinsey's recent global fashion index, the global fashion industry has reached a new height in 2018. However, the recovery of the fashion industry has also shown a serious polarization, and the economic benefits of most fashion giants have accumulated to the top 20 in value creation of the fashion industry - ldquo; super winner - rdquo; especially in the luxury industry. Luxury giants now make about $25 billion in economic profits, equivalent to 97% of the value created by the entire fashion industry (70% in 2010).
Despite the impact of the macroeconomic environment and the Sino-US trade conflict in 2018, most luxury giants are still showing strong growth momentum, except for individual group liquidity downturn. This is evident from the recent financial reports published one after another.
LVMH: Revenue refresh record
Although the growth rate of luxury goods in 2018 slowed down from 13% in 2017, LVMH, as a luxury goods giant, still produced a brilliant report card under the current international economic and trade background.
LVMH, the world's largest luxury group, recently released its fourth quarter and full year performance report for fiscal year 2018. LVMH reported double-digit growth in revenue and profits in fiscal year 2018. Revenue increased by 10% to 46.8 billion euros and operating profit increased by 21% to 10 billion euros. Basically in line with analysts'expectations, it also refreshed the group's historical record.
Meanwhile, driven by the core brand LV (sales of 10 billion euros) and Dior, the group's fashion and leather department's revenue has achieved double-digit growth for nine consecutive quarters, and its operating profit has increased by 21% throughout the year.
Surprisingly, France's & ldquo; Huangwaistcoat & rdquo; campaign did not have a significant impact on the company's sales in the European market, said Guiony, LV's financial director. Although LV stores closed during the parade, many customers changed their shopping time and still went to the store to spend.
Asia is still a major market for LV. Guiony said that although sales in China shifted slightly to other Asian markets, there were no obvious signs of a slowdown. Instead, Chinese consumers'spending on most of LVMH's brands grew by double digits in the fourth quarter.
Kering: Performance exceeded expectations < br />.
According to the fourth quarter and full-year performance report released on February 12 by Kaiyun Group, one of the three largest luxury giants in the world, the annual sales of Kaiyun Group increased by 29.4% to 13.665 billion euros in 2018, the operating profit increased by 46.6% to 3.944 billion euros, and the revenue of the luxury sector grew by more than 20% for eight consecutive quarters. The growth rate has obviously exceeded its competition rate. Rival LVMH's fashion and leather Department saw a 15% increase in sales last year.
Kaiyun Group's profit margin jumped 5% to 28.9% in 2018, benefiting from the divestiture of sportswear brand Puma (analysts had expected a 27% increase). Chief Financial Officer Jean-Marc Duplaix, speaking with reporters, said that in the fourth quarter the demand of Chinese customers remained “ very dynamic ” their purchases abroad decreased, their purchases at home increased, and their domestic “ trend was still very good ”.
GUCCI: Sales topped 8 billion Euros < br />.
It is worth noting that GUCCI's annual sales in 2018, which have been leading for 12 consecutive quarters, have increased by 36.9% to 8.285 billion euros from a year ago. For the first time in history, it has entered 8 billion euros club. Its brand operating profit has soared by 54.2% to 3.275 billion euros from the previous year. Its sales and operating profits account for 63% and 78% of the luxury sales and operating profits of Kaiyun Group, the parent company, respectively. GUCCI's fourth quarter sales grew by 28% endogenously to 2.3 billion euros ($2.6 billion). Further consolidate GUCCI's leading position in the global luxury industry.
Richemont: Double Growth in China Market
Richemont's recent third-quarter results show that the Swiss watch market is slowing down.
From October to December 2018, Lifeng Group's revenue grew by 25.2% to 3.915 billion Swiss francs, basically in line with market expectations of 3.92 billion euros, compared with 3.127 billion Swiss francs in the same period last year, with a 24% increase in the fixed exchange rate. However, the double-digit growth was mainly attributed to the acquisition of Yoox Net-a-Porter Group SpA (YNAP) and Watchfinder.co.uk. Excluding the two businesses, Group sales grew by only 6% in the third quarter and fixed exchange rate by 5%.
However, the group said that the Chinese mainland market recorded double-digit growth in the third quarter, Chinese consumers'consumption of tourism channels declined, which benefited the local market, while the European and Middle East (-13%) markets recorded negative performance, and the growth rate of Hong Kong market in China also slowed down significantly.
Herm & egrave; s: Revenue approaching 6 billion euros & nbsp; < br />
According to Herm & egrave; s'financial performance report for 2018, the group's revenue in 2018 rose 10% year-on-year at a fixed exchange rate to 59%.Among the 666 million euros, revenue rose 10% in the fourth quarter compared with the same period last year. Gross profit margin of the group was close to 34% in 2018.
By region, revenue in Asia, excluding Japan, rose 14%, and sales in China were particularly strong. Herm & egrave; s expanded and updated Shanghai IFC stores in China in 2018, opened new stores in Hong Kong, Changsha and Xi'an, China, and launched the Chinese version of its official website in October 2018.
Axel Dumas, CEO of Hermes Group, expressed satisfaction with its performance in 2018. & ldquo: In the unstable global environment, I'm glad Hermes'earnings are approaching 6 billion euros, which reflects the attractiveness of our products. & rdquo;
Chanel: The fastest growth in value in 2018
According to the annual ranking of 500 most valuable brands published by Brand Finance, a British data intelligence company, the brand value of Chanel, Dior, Cartier and LV has increased significantly from 2018 to 2019, driven by strong Chinese consumers and the Chinese market. The fastest growing brand is Chanel, whose brand value soared 95.1% in mid-2018, ranking from the previous year. 299 jumped to 149. The rankings of GUCCI and Herm & egrave; s remained unchanged, ranking 182 and 163 respectively.
Tods: Group and brand revenue both fell < br />.
On January 24, Tod & 39; s, an Italian luxury goods group, reported a decline of 24% to 944 million euros in 2008, mainly due to the decline in revenue of wholesale channels, core footwear business and leather department, with sales of footwear department falling 19% to 743.6 million euros and revenue of leather accessories Department falling 53% to 128.6 million euros.
During the period, Tod&39; s brand sales fell by 3.3% to 498.6 million euros, Roger Vivier sales fell by 32% to 173.5 million euros, Hogan's revenue increased by 11% to 206.1 million euros, and Fay's sales fell by 35% to 613 million euros. Diego Della Valle, chairman and CEO of Tod&39; s, said that despite growing international economic and environmental uncertainties, sales in Greater China accelerated in the fourth quarter, with revenue in the region growing 31% to 210 million euros year-on-year at real exchange rates.
Tapestry: Quarterly results below expectations & nbsp;
Recently, Tapestry Inc., the parent company of Coach, Kate Spade and Stuart Weitzman, announced its second quarter earnings for the fiscal year 2018/2019. Sales and profits grew at a double rate. However, due to the influence of macroeconomic and geopolitical factors, it underperformed market expectations. Meanwhile, Tapestry Group lowered its annual performance expectations.
The second quarter's results did not satisfy analysts, or reassure them. Tapestry shares fell 14.83% to 33% by the close of February 7, compared with the previous trading day.48 dollars per share.
Greater China will become the world's largest luxury market
From the above results, we can see that China has become an important driving force for the growth of global luxury consumption in 2018. According to the McKinsey report, the annual consumption of Chinese luxury consumers exceeds 50 billion yuan, accounting for nearly one third of the global luxury market.
Despite the impact of the macroeconomic environment and the Sino-US trade conflict in 2018, the latest survey data show that 46% of mainland Chinese consumers and 32% of Hong Kong Chinese consumers still say they will spend more on luxury goods in the coming year. The younger millennials have shown amazing buying potential and are becoming the main purchasers of luxury goods.
The McKinsey Fashionscope report also points out that Greater China will overtake the United States as the world's largest fashion market for the first time in centuries. The major reshuffle in this fashion industry is due to the recession of the US economy and the growth of the Chinese market. According to an earlier report by Bain Consulting, Chinese consumers are expected to contribute nearly half of global luxury sales by 2025. In recent years, Chinese consumers'consumption mentality has become more rational. In previous years, consumers preferred to go shopping abroad crazily, but in recent years, they began to return to local consumption.
Analysts at Bank of Switzerland said that changes in consumer habits in China and the growing importance of the Chinese market in the luxury market have led many luxury brands to adjust their pricing models, reducing the price gap between China and overseas markets, which has also greatly facilitated consumer reflux.
Future Challenges and Potential of Luxury Industry
Recently, Rhode Research Center for Public Relations and Precision Markets released the Luxury Goods Report of China 2019, which explores industry trends from consumer behavior and preferences. Gao Ming, senior vice president of Rhode Asia and general manager of luxury goods business in China, said: & ldquo; In 2018, we noticed clearly that digital channels have changed the communication and market of the whole industry, the amazing potential of the younger generation's purchasing power, and the change of leading brands in different segments of the market. In this era of drastic change, it is difficult for brands to rely on a single strategy. We need to seize multiple opportunities in time to seize the changing Chinese luxury consumers. & rdquo;
At present, in order to cope with the potential political and economic impact, luxury industry mainly has the following countermeasures:
One is to change the mode of production and find new economic growth points.
In the future, in response to the trend of sustainable development and consumer demand, production on demand and reduction of inventory backlog will become the new normal, according to the industry report.
The report points out that the enthusiasm of the younger generation for social responsibility and environmental undertakings has never been higher. According to Deloitte's consumer insight report released in 2017, the Millennials value eco-friendliness in their purchases, while data show that 66% of young consumers prefer to buy eco-friendly products. In order to embrace young people, the luxury industry must make fundamental reforms.
In addition, practicing the concept of environmental protection and sustainable development has become a new economic growth point in luxury industry. McKinsey pointed out in the fashion industry report in 2018 that: & ldquo; sustainable development is an increasingly important issue, and circular economy will gradually be embedded in the whole value chain. & rdquo;
The second is to choose cross-border marketing to expand the brand possibilities.
With the increasingly fierce competition in the industry and the ever-changing preferences of consumers, today's luxury brands have long abandoned the single-handed approach.
Joint Tide in Luxury Industry is one of the most popular games recently: LV Joint Supreme or Dior Joint KAWSLuxury brands bring huge cash flow to them, and also label them with the label of “ fashion & rdquo; & ldquo; Youth & rdquo; equal-energy stamp in young people & ldquo; pain point & rdquo, which is the best proof from the sales of LV co-name supreme series exceeding 100 million yuan.
Third, while seizing the Chinese market, we should actively explore emerging areas.
With the growth of middle class consumer groups and the strengthening of manufacturing industry, India will become the focus of fashion industry in the future. Euromonitor has predicted that by 2019, the Indian luxury market will more than double its size. Although this figure is far behind the Chinese market in terms of volume, the growth rate of the Indian luxury market deserves attention.
Latin America and other regions are also potential luxury market, & ldquo; luxury industry market demand and investment forecast analysis report & rdquo; statistics show that the demand for luxury goods in China, as well as emerging markets such as the Middle East, Latin America and Eastern Europe will promote the growth of luxury market. Colombia will become a luxury city in Latin America.
