Burberry, Hermes Signal U.S. Slowdown on Heels of Asian Slumpby and
Hermes sales growth slowed to 2 percent in Americas region
Burberry CFO Fairweather says consumer sentiment hurting
Hermes’s revenue in the Americas rose 2 percent in the third quarter, slowing from 11 percent in the preceding three months, the French maker of Birkin bags said Thursday. London-based Burberry reported decelerating second-quarter sales in the U.S., the world’s biggest luxury market.
The region “remains very volatile and quite difficult to read,” Burberry Chief Financial Officer Carol Fairweather said on a call to reporters.
Makers of high-priced jewelry and designer fashions are increasingly signaling a slowdown in the U.S. market, which Bain & Co. estimates is worth 79 billion euros ($85 billion). Globally, the luxury-goods industry is set to post its worst year since 2009 as a combination of stock market turmoil, a strong dollar and a commodity-price rout curb demand. While local consumption in the U.S. is rising, it’s not enough to offset a drop in demand from tourists, according to Bain.
Danish jeweler Pandora A/S reported third-quarter earnings Tuesday that missed estimates as U.S. growth weakened. Pandora said the change was due to a shift in focus from bracelets to charms. Last week, Cartier owner Richemont said currency-neutral sales barely grew in the Americas, as sales of Swiss watches dropped.
Sales of luxury goods in U.S. department stores have suffered, Bain said, while products for men have outperformed those for women. Macy’s Inc., the largest U.S. department-store company, plunged the most in more than seven years Wednesday after the chain cut its annual profit forecast, casting a pall on the rest of the industry.
Still, Burberry’s first-half profit beat analysts’ estimates as Chief Executive Officer Christopher Bailey cut expenses. Hermes’s third-quarter sales growth was in line with analysts’ expectations. Europe is one bright spot, as Chinese tourists have flocked to boutiques in Paris and Milan to take advantage of the weak euro.
“China has not stopped buying luxury, but you really have to be targeting the right channels,” Virginie Maisonneuve, founder and managing director of Maisonneuve Global Advisors, said in a Bloomberg Television interview Thursday. “It’s harder than it was 10 to 15 years ago.”
Burberry shares rose 1.5 percent to 1,355 pence at 9:33 a.m. in London. Hermes shares were little changed in Paris.