In a miserable week for the world's biggest makers of luxury goods, the last thing they will want to do is reach for the champagne.
Over the past seven days, Prada posted its lowest profit in five years, while Burberry reported weaker-than-expected sales in the fourth quarter, and warned full-year profit would be at the low end of analyst estimates.
Ferrari investors gathering for the luxury carmaker's annual general meeting on Friday aren't in a much better mood: the stock has tumbled 20 percent since its initial public offering.
Even LVMH -- the owner of Moet & Chandon and Veuve Cliquot -- wasn't immune, posting weaker-than-expected sales of handbags.
It’s all an about turn from the situation two years ago, when demand for luxury goods was holding up as global economic growth slowed. Then, sales were turbocharged by Chinese shoppers snapping up everything from Swiss watches to Burberry trench coats.
LVMH, Burberry and Prada all warned fewer tourists were coming to Europe after the recent terrorist attacks in Paris and Brussels. Burberry said this was the most significant change between its third and fourth quarter. Sales from the travelling luxury consumer, particular from China, declined sharply.
Consumer spending in China appears to holding up for now -- but there's a big question mark over whether the weakness seen outside the country comes home. If that happens, the industry can expect much additional pain.
Tastes in China are changing too. Appetite for brand-heavy handbags, and bling watches isn't as ravenous it once was as the government cracks down on ostentatious consumerism. That's bad news for Ferrari, whose cars are anything but discreet.
Amid the storm, LVMH looks best-positioned.
It's the least exposed of the three big luxury goods group to China: it gets 27 percent of its sale from the Asia region excluding Japan, according to Bloomberg Intelligence. At Prada, the figure is about 35 percent. It's even higher at Burberry, where China alone accounts for 40 percent of sales to consumers.
Meanwhile, Louis Vuitton bags and Celine coats still appeal to the ever important European consumer. Its greater scale -- $39 billion of sales in 2015 and 70 prestigious brands -- should also afford it some protection.
It's also helped by its range of lower priced products.
Bloomberg Intelligence's Deborah Aitken points out both LVMH and Burberry were buoyed by sales of beauty products and fragrances -- which are both cheaper than their other clothes and hand bags. Sale at LVMH's unit climbed 9 percent in the quarter.
LVMH's beauty and fragrance business accounted for 14 percent of sales in the quarter. It also owns the Sephora beauty retailer, which is growing strongly.
LVMH's shares have lagged both Burberry and Prada so far this year, but only slightly. The company trades at just over 18 times estimated earnings, a little more than Burberry but much less than Prada's lofty multiple of 23 times. If might be too early to crack open the champagne, but that looks a safer haven for now.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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