Luxury Brands Are Powerless To Save The Field.

This week last week, Prada The group announced its earnings in the first nine months of this year. The report shows that the performance of the group in the three quarter has deteriorated sharply, not only has the sales significantly shrunk, but also the profits have been greatly reduced. Due to the market environment in Europe and the Asia Pacific region, the Prada brand's three quarter revenue fell 7.5% to 651 million 800 thousand euros, resulting in a total revenue rise from 1.3% in the first half to 5.6% in the first half and 44% in profits. Although the Miu Miu and shoe brand Churchs belonging to the same group both achieve more than 4% sales growth, the contribution of the two brands is obviously a drop in the bucket in the face of the negative impact of Prada, which accounts for more than 80% of the group's revenue.

From a regional perspective, the Greater China region is the "worst hit area" of the Prada group's performance: after the impact of the exchange rate was removed, the sales fell by 12%. The group said the performance of the Greater China region in October showed a further deterioration, which seemed to indicate that Prada had little chance of reversing the decline in a short period of time. In addition, the performance of the Americas and European markets also fell. The Prada market in Italy was the second largest in the mainland, and only 10.8% in the Greater China region. Only Japan and the Middle East achieved a small increase.

In the first quarter of this year, the profits of the LVMH giants in the third quarter were 12.4% lower than those in the first half of the year, while the LVMH group achieved a 5% growth in the third quarter, but the results were mainly due to the group's perfume sales, watches and jewellery sales, but its high value-added leather goods and garment business had not improved; the Salvatore Ferragamo's three quarter profits fell 4.6%; the Lauren Lauren's annual operating profit showed an early warning; the group sold more 26.2% in the first 9 months of the year, and the profit margins were horrible, with the Tods brand shrinking 3.9% and the Hogan sales decreasing by 1.8%. The group had only Prada to achieve 12.2% growth, but this figure also slowed down significantly compared with the same period last year. Looking around the luxury industry Alfred Dunhill Lancel, Chlo, Piaget, Baume & Mercier and Cartier can not get rid of the sales slough.

At the same time, it seems that the light luxury brands that have been unanimously optimistic about the market in the past few years have not been very good this year. Whether it is in the middle and low grade market of the US luxury brand, which is entrenched in the US $700-1200, or the middle and high end market of the $700-1200 brand, it is a scene of sadness: Coach in 2015, the revenue in the first fiscal year has dropped by 45.3%; Michael Kors has gone down this year, and the sales growth in the second quarter is much lower than that in the market and brand; Kate Spade has halved its third quarter growth this year; Mulberry has fallen 17% in the first three quarters, with a net loss of 1 million 110 thousand pounds. The lightweight luxury brand that has been placed in high hopes has also been in a state of decline this year after a brief triumph. This makes people wonder, "what's wrong with the luxury market?"

　 Richemont's many brands in China have poor performance in China.

Looking carefully at the earnings reports of the major luxury brands, it is easy to see that sales in the Greater China region have been repeatedly mentioned and become the culprit behind the "shocking" performance figures of the global luxury industry. For example, the sales of Tods group in China have gone back 6%, while the Richemont peak group has successfully blocked its decline in China this year, but it has not yet achieved profitability. The sales of LVMH group and Salvatore Ferragamo in China can only be maintained at the low level of 3%-5%. Among them, China's economic slowdown, intensified government anti-corruption efforts, disturbances in Hongkong's turbulent society, and unstable factors in China's surrounding areas have become the "Star" words in this year's luxury brand earnings report. All major brands have uniformly pushed bad performance to the irresistible factors of "China's market environment". British commentator Adam Thomson has repeatedly stressed the power of Hongkong's "occupy the central" movement and the mainland's anti-corruption trend in its article "perfect storm approaching the luxury industry".

There is no doubt that the transformation of China's economic mode and consumption environment has brought serious challenges to the global performance of international luxury brands, especially since China successfully surpassed the United States and Europe with 29% of the world's luxury consumption share. "Uncertain China" market is a fatal blow to any international luxury brand.

However, the depression of the environment is not the whole story. Despite the rapid deterioration of China's luxury consumption environment, there are still bright bright colors on the market. Herm s's three quarter results were warmer and overall sales increased by 11%. Although brand sales in China are also affected by external factors, there is a certain degree of tightening, but 10.2% profit growth still leads the industry. In response, Axel Dumas, chief executive of Herm s, said: "at present, the form of China's luxury market will be more and more beneficial to Herm s, because Chinese consumers are gradually stepping out of the stage of showing off luxury goods and begin to pay attention to the connotation of luxury goods." Luca Solca, director of luxury research at Bank Securities Department, Paris, also holds the same view. He thinks that luxury brands such as Louis Vuitton, Gucci and Prada have not caught the taste of the more mature Chinese consumers in time, and have not worked hard to shape or improve the brand value.

In the third quarter of this year, the top traditional luxury brands declined to varying degrees.

This leads to a phenomenon: when the economy is booming, consumers are willing to spend more money to try different luxury brands, so there is a contention of flowers in the market. But when the economic environment changes, consumers' "monetary tightening", the demand for gifts diminish, and luxury consumption turns to personal consumption, luxury goods with more brand value are often more secure. So the lack of value accumulation of light luxury brand has become the victim of the first batch of "killed in battle". For many of the top luxury goods, it is not lack of brand value. Today, "losing the Chinese Empire" is mainly lost in the lack of enough time to change. At present, the sales and profits of Louis Vuitton, Gucci and Prada in China basically depend on the low price products which lack investment value. The high priced products are still in an awkward situation with high complexity. It is still necessary to cultivate their "mass base" in the Chinese market by "time and fire". Moreover, China's luxury market can be highly selective nowadays. Louis Vuitton and Gucci's "go Logo" campaign has not been effective, and it is easy to catch up with the rising stars such as Bottega Veneta. Bottega Veneta continued to maintain the two digit growth momentum in the third quarter of this year, further consolidating its position as the top second of Kai Yun group.

In addition, after ten years of rapid growth in China, some brands have been saturated in the Chinese market and produced an aesthetic fatigue. This is also one of the reasons why consumers turn to the top luxury brands. Luca Solca, director of the luxury Research Department of the bank and Securities Department of Paris, once said that Gucci should learn about Saint Laurent Pairs's innovation. At present, Saint Laurent Pairs is the fastest profit brand of Kai Yun group. This achievement is due to the fresh or even controversial changes brought to the brand after the entry of Hedi Slimane. As of the end of September, Saint Laurent Pairs's three quarter revenue grew by 27.6% to 177 million 800 thousand euros.

Herm s, Saint Laurent Pairs and Bottega Veneta in China Luxury goods Upward trend in adverse environment

A few months ago, the head of HSBC consumer and retail research, irwan Langbo, unveiled his new book, the shining Dynasty: why the era of Chinese luxury consumers has just begun. In the book, he said that the core consumers of luxury goods in China used to be male traders, who spend most of their money on gifts rather than on their own. Now the anti-corruption trend in mainland China has made individual consumers gradually become the mainstream of luxury consumption. This will make China's luxury market healthier and will make Chinese consumers more and more like American consumers. From the perspective of luxury brands, the current "labor pains" will also help brands transform from the extensive mode of grabbing to the more attention to the connotation and innovation of the development pattern. After all, with the current development of luxury market in China, the number of luxury goods in China will reach about 150 million by 2025, which will surpass the total population of Japan. The luxury market in China will be more subdivided, and any powerful luxury brand will find its corresponding position.

Prada group has 170 direct outlets in the Asia Pacific market. During the reporting period, 16 new stores were opened and 3 stores closed. Prada chief executive Patrizio Bertelli said: "2014 is a more challenging year than expected. On the basis of this difficult international business environment, the luxury market will still be in a period of adjustment. When to resume is not clear. "

"We expect Prada to have at least three quarters of weak top line trend, profit margin decline and negative EPS (earnings per share) growth, so we recommend that investors take advantage of recent stock price as a selling opportunity," said Karim Salamatian, an analyst at Credit Suisse. Prada's share price has plummeted nearly 1/3 this year.