US luxury card spending falls 6% in September, a third monthly drop, Citi data show

US credit card spending on luxury brands fell for a third straight month in September, Citi said on Tuesday, 6 October, according to Reuters. Purchases were down 6% from a year earlier, after 4% declines in both July and August, in data based on millions of card transactions.

Where it hurts

Citi said watches and luxury jewellery deteriorated further in September, while spending on leather goods and ready-to-wear improved from the previous month. Brands with greater exposure to higher-end customers “should remain relatively resilient, supported by equity-market wealth effects,” the bank’s analysts wrote. They named Tapestry (Coach, Kate Spade), LVMH (Louis Vuitton, Tiffany) and Ferragamo among the companies most exposed to the US. Most soft-luxury brands have raised prices by low single digits so far this year, slightly less than watch and jewellery makers, the note said.

Ahead of the midterms and earnings

Luxury groups had been counting on wealthy American shoppers to offset weakness in China and the economic fallout of the Iran war, Reuters noted. The Citi figures follow Conference Board and University of Michigan surveys showing growing unease about the US economy ahead of the 3 November midterm elections. Morgan Stanley expects companies to flag weaker US demand in the third-quarter season, which starts when LVMH reports sales on 12 October; Kering reports on 22 October and, according to Italian broker Equita, told analysts last week to expect a slowdown in the US.