Luxury Brands Are Already Feeling the China Burn

CNN News 1/3/19

London (CNN Business)  Chinese shoppers are buying fewer smartphones. Expensive handbags and watches could be next.

European luxury stocks were hit Thursday after Apple (AAPL) said it sold fewer iPhones than expected in the final three months of 2018 because of a sharp economic slowdown in China.

 

Shares in LVMH (LVMUY), which owns brands including Fendi and Louis Vuitton, were down 3%. Burberry (BURBY) stock plunged 5.8% and Gucci owner Kering (PPRUY) dropped 4%. Swiss watchmaking group Swatch (SWGNF) shed 3%.
Chinese luxury spending remained strong in the first half of 2018 despite a sluggish economy. But European fashion houses have not yet reported results for the end of the year, and investors are worried they main contain some nasty surprises.
If Chinese shoppers weren’t willing to spend big on a new iPhone, the thinking goes, they may have also put expensive purchases of luxury goods on hold.

A man walks past a Gucci store in Shanghai.

<img alt=”A man walks past a Gucci store in Shanghai.” class=”media__image” src=”//cdn.cnn.com/cnnnext/dam/assets/190103081346-01-gucci-china-file-large-169.jpg”>

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