- Title: Luxury brands surge in China
- Date: 17th January 2018
- Summary: LONDON, ENGLAND, UK (JANUARY 17, 2018) (REUTERS) (SOUNDBITE) (English) CMC MARKETS MARKET ANALYST, MICHAEL HEWSON, SAYING: "I think we're seeing increased demand from a younger demographic the 20 to 34 year old but I think what's more important and I think this is what the Chinese government have done is they've lowered import taxes on some of the more high value brands like Burberry, Gucci and Hermes and that's making these sorts of products that much more affordable."
- Embargoed: 31st January 2018 15:05
- Keywords: Burberry fashion China luxury brand
- Location: UNKNOWN LOCATION / LONDON, ENGLAND, UK / HONG KONG, CHINA
- City: UNKNOWN LOCATION / LONDON, ENGLAND, UK / HONG KONG, CHINA
- Country: China
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA0027YI1WGD
- Aspect Ratio: 16:9
- Story Text: Domestic sales of Gucci handbags to Chanel cosmetics, sluggish in China for years, rose at the fastest pace in over half a decade last year and are poised to consolidate the gains in 2018, according to consultancy Bain & Co.
That could provide a major fillip for brands targeting the world's top luxury spenders, though who benefits most will depend on which brands are able to lure in China's big-spending youth - now the driving force in the market.
Sales of luxury goods in China hit 142 billion yuan ($22.07 billion) last year, up around 20 percent from the year before, Bain & Co said in a report on Wednesday. That's the sharpest growth since 2011, when luxury sales started to be hit by slower economic growth and a fierce crackdown on corruption.
China's domestic market makes up 8 percent of global luxury sales, according to Bain, and despite fast growth at home Chinese shoppers still make three-quarters of their luxury purchases overseas.
The revival is being driven by China's tech-savvy millennial generation aged between 20 to 34, who generally prefer ready-to-wear and fast fashion over more traditional design, helping propel new areas like luxury casual wear and sports wear.
But Chinese growth wasn't enough for one luxury brand - British luxury brand Burberry reported a 2 percent drop in retail revenue for the Christmas quarter after sales in Europe slipped against a year ago when a fall in the pound had helped its home market.
Chief Executive Marco Gobbetti set out a plan in November to take the label further up-market, but the company said there would be little, if any, growth in revenue and operating profit until its 2021 financial year as the programme was implemented.
Shares in Burberry, up 9 percent over the last year, were down 4.7 percent at 0815 GMT after the trading update.
Burberry said its retail revenue was 719 million pounds ($991 million) in the three months to Dec. 31, its fiscal third quarter, down from 735 million pounds in the same period in 2016.
The firm, known for its camel, red and black check, said retail revenue was up 1 percent on an underlying basis, while comparable store sales rose 2 percent - below analysts' expectations.
Comparable store sales grew by a mid-single figure percentage in Asia Pacific and mainland China, and by a low single digit in the Americas.
However, they fell by a low single figure in its Europe division, hurt by a larger fall in the UK which performed very strongly in the same period in 2016. - Copyright Holder: REUTERS
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