Specialist
Director at LVMH Fashion (Shanghai) Trading Co Ltd (LVMH Moët Hennessy Louis Vuitton SE)
Agenda
- China coronavirus restrictions’ sales impact on the soft luxury category – 2022 growth outlook, demand recovery dynamics and volume and pricing trends
- Opportunities to offset sales declines in physical retail through online channel growth
- Competitive analysis – Gucci (PAR: KER) vs Hermès (PAR: RMS) vs Prada (HKG: 1913)
- Sales decline implications on profitability in 2022
Questions
1.
What was the organic growth rate for personal luxury goods in China over April and May 2022 – when there were coronavirus restrictions across this geography – vs 2021? How did this trend vs pre-coronavirus, so over the last three years?
2.
You mentioned some regional performance differences by city. Were there any bright spots during April and May across regions, or any particular regions that have been most hit?
3.
How did the decline in spend differ in hard vs soft luxury during April and May?
4.
What bounceback have we seen in personal luxury goods consumption and demand in China? I know it’s very early days, lockdowns have just been removed and restrictions eased, but is there any early take on the mood of the Chinese customer and what we’re seeing from a spend or growth perspective YoY?
5.
Why do you think we might see a shorter but more intense period of revenge spending this time around? You said there was a high revenge spending intensity, but that this spending might not go on for as long as it has done in previous post-lockdown periods.
6.
What are inventory levels like coming out of lockdown? How does that differ across categories, so soft and hard luxury, or across brands? I know there were some issues during the lockdowns around sourcing products due to the restrictions.
7.
What are the post-lockdown spending differences in hard vs soft luxury among upper-middle-class customers, which you said show the highest intensity in spending?
8.
Why are we seeing this growth profile difference between hard and soft luxury?
9.
You suggested in our last Forum Interview at the beginning of the China lockdown – when the outlook was more positive in terms of the timelines towards coming out of this lockdown – that we could see a 13-15% growth in the luxury goods market in 2022. Have your assumptions changed at all regarding this full-year growth figure, and why or why not?
10.
How are you expecting growth to differ across megabrands such as Hermès, Gucci and Prada vs smaller-tier brands?
11.
We’ve recently seen a leadership change at Gucci, with Laurent Cathala being appointed as President of the Greater China fashion business. What are your views on this change and how it could impact the brand’s turnaround?
12.
How effective has the online channel been during lockdowns in offsetting declines in the in-store channel
13.
What is the rough share of business across the three e-commerce sub-tiers you referenced – dot-cn, third-party and cross-border?
14.
Which players do you think have the best online proposition across dot-cn, third party and cross-border?
15.
You referenced a full-price sell-through rate of 50-60% in a normal year, which would drop by 10%. Was that the reference point that you mentioned?
16.
Which brands have the highest bargaining power with landlords?
17.
You touched on pricing in terms of earlier and deeper discounts and utilisation of the outlet channel to manage excess inventory. What can brands who don’t have an outlet channel and historically have refused to participate in discounts do to manage this?
18.
You said we could expect a profitability decline YoY. What profitability impact could we see in China in 2022 vs 2021 in light of the overall market challenges?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary one week trial.
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited
