Xi Jinping’s call for “common prosperity” sent shudders through the stock market. This new policy, which portends a drop in purchasing power for the wealthiest Chinese, pushed down luxury share prices, which includes watch brands. What implications does this have?
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The latest study from Bain & Co – Altagamma reports a return to growth for luxury in the first quarter. Will this play out for the entire year or – the more likely option according to Bain – will full recovery be in 2022?
Richemont’s sales for the year ended March 31, 2021 fell by 8%. The group’s jewellery business, online retail and strong performance in Asia-Pacific enabled what are “solid” results in a global pandemic.
Hainan island – one of the stop-offs for Watches and Wonders 2020 – reels in tourists and Chinese shoppers with its beaches, palm trees and duty-free malls, a sector that is now opening to competition. Richemont is in the running through a collaboration with China Duty Free Group and a stake in Dufry.
In the space of a year, Farfetch has become the one to watch in luxury e-commerce, a position confirmed by the billion-dollar investment by Richemont and Alibaba in the company, which is still reporting losses, and by its share price performance. In the twelve months to February 18, Farfetch stock gained almost 450%.
As confirmed by Richemont’s third-quarter results, jewellery sales remain strong to the point that jewellery is the most promising segment in the personal luxury goods market. Driving this growth: changing purchasing patterns and soaring demand among Chinese customers.
After a forecast decline of 23% in 2020, Bain & Co expects the personal luxury goods market to gain in the region of 15% this year. All eyes are on the evolution of Covid-19, macroeconomic factors and the return of international travel.