Luxury cools in China but brands keep raising prices in South Korea, with Chanel up at least four times this year

The world’s biggest luxury groups have all blamed weak demand in China for a slower third quarter, Chosun Biz writes in a review of results from LVMH, Hermès, Kering and Prada. Shrinking asset values from the property slump and falling stocks, plus tax pressure on the wealthy, are keeping Chinese shoppers cautious.

The numbers

LVMH’s third-quarter revenue was €18.5 billion, up 1%, but its fashion and leather goods division fell 5% to €8.2 billion, worse than analysts expected. Hermès grew 4.3% at constant exchange rates, below consensus, as its apparel and accessories unit shrank 2%. Kering’s sales fell 1% on an underlying basis and Gucci dropped 6% to €1.29 billion. Bloomberg Opinion, via FashionNetwork, says US sales, which had been compensating, have also slowed, putting pressure on Kering CEO Luca de Meo’s turnaround.

Korea goes the other way

LVMH’s finance chief told analysts the group has no plan for “bold measures” such as price cuts, which could damage brand allure. In South Korea, prices keep rising: Chanel has raised prices at least four times this year. In July its Classic Flap Bag Medium went to 18.8 million won from 17.9 million, and in April the small Chanel 25 bag passed 10 million won for the first time. This is happening even though the won has strengthened to around 1,320 per dollar, its strongest in about two years.