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Fashion & Trends, People

War and Terror: Luxury's Worst Enemies

By Sofia Celeste 07 settembre 2017

As Summer comes to a close, fashion faces a harsh reality check. 

MILAN, ITALY – On the upscale streets of Apgujeong-dong in Seoul, the Ginza district in Japan and the Pale San Vitores Road in Guam’s Tumon Bay, Asian shoppers continue to fill their bags with the latest Gucci bags and Prada slippers.

Despite the looming threat of nuclear warfare in the Pacific Ocean and a summer of terrorism and turmoil in the rest of the world, it is business as usual.

In the latest North Korean missile crisis saga, Pyongyang has claimed to have developed a hydrogen bomb. Its mercurial leader, Kim Jong Un continues to threaten US shores, the island of Guam, as well as South Korean and Japanese air space. Test missiles continue to threaten the idyllic waters of the region, where many family vacations are coming to a close.

For now, and in terms of numbers, Asia and Russia continue to fuel Europe's fashion economy.

This week, in preparation of Milan's fashion season, Italy’s Camera della Moda said Asia sales rose 8 percent in the January-May period, and 16 percent in sales to Russia. In particular, China was up 13 percent and South Korea was up a whopping 22 percent.

So far, analysts have yet to revise their forecasts for the second half of the year, but it is likely that turmoil in the Pacific Rim, Isis-driven terrorism in Europe, the Brexit effect, the strengthening of the euro, retailer bankruptcies and the ongoing hurricane season, will likely cramp consumer spending and tourism worldwide.

At the moment, a reduction in Asian travel is not expected to hinder sales generated from Chinese consumers who are currently increasing their spending at home and online. Chinese consumer's online consumption is one reason why luxury brands are still smiling. Fingers crossed, by the end of the year, the doom and gloom of this summer of storms and geopolitical fire will have subsided.

Camera della Moda did say this week that they expect a slight slowdown in the second half of the year, due in large part to the euros momentum, especially against the dollar and the pound, which is expected to fall further this year.

“A strengthening euro is creating a headwind for euro-based luxury goods companies down the road,” Exane BNP Paribas said in a recent research note.

The bank also said that luxury goods is a "cyclical" sector that is well-seasoned when it comes to dealing with macroeconomic headwinds. Travel too, is a factor that many strong companies are well prepared for, but war and terrorist attacks are another issue.

"Luxury goods sales and share price performance suffer from travel disruption. War, terrorist attacks and epidemics are luxury's worst enemies," the bank said.

 

   

 



Sofia Celeste
FAIRPLAY Editor-in-Chief

When she is not hunting down the latest in tech and fashion, Sofia Celeste is scouting artisan talent for her online magazine bacoluxury.com. Born in the US and raised on the Pacific Island of Guam, she went on to write for Dow Jones Newswires and the Wall Street Journal. Her work is now regularly published in top fashion publications NOWFASHION and WWD.

As Summer comes to a close, fashion faces a harsh reality check. 

MILAN, ITALY – On the upscale streets of Apgujeong-dong in Seoul, the Ginza district in Japan and the Pale San Vitores Road in Guam’s Tumon Bay, Asian shoppers continue to fill their bags with the latest Gucci bags and Prada slippers.

Despite the looming threat of nuclear warfare in the Pacific Ocean and a summer of terrorism and turmoil in the rest of the world, it is business as usual.

In the latest North Korean missile crisis saga, Pyongyang has claimed to have developed a hydrogen bomb. Its mercurial leader, Kim Jong Un continues to threaten US shores, the island of Guam, as well as South Korean and Japanese air space. Test missiles continue to threaten the idyllic waters of the region, where many family vacations are coming to a close.

For now, and in terms of numbers, Asia and Russia continue to fuel Europe's fashion economy.

This week, in preparation of Milan's fashion season, Italy’s Camera della Moda said Asia sales rose 8 percent in the January-May period, and 16 percent in sales to Russia. In particular, China was up 13 percent and South Korea was up a whopping 22 percent.

So far, analysts have yet to revise their forecasts for the second half of the year, but it is likely that turmoil in the Pacific Rim, Isis-driven terrorism in Europe, the Brexit effect, the strengthening of the euro, retailer bankruptcies and the ongoing hurricane season, will likely cramp consumer spending and tourism worldwide.

At the moment, a reduction in Asian travel is not expected to hinder sales generated from Chinese consumers who are currently increasing their spending at home and online. Chinese consumer's online consumption is one reason why luxury brands are still smiling. Fingers crossed, by the end of the year, the doom and gloom of this summer of storms and geopolitical fire will have subsided.

Camera della Moda did say this week that they expect a slight slowdown in the second half of the year, due in large part to the euros momentum, especially against the dollar and the pound, which is expected to fall further this year.

“A strengthening euro is creating a headwind for euro-based luxury goods companies down the road,” Exane BNP Paribas said in a recent research note.

The bank also said that luxury goods is a "cyclical" sector that is well-seasoned when it comes to dealing with macroeconomic headwinds. Travel too, is a factor that many strong companies are well prepared for, but war and terrorist attacks are another issue.

"Luxury goods sales and share price performance suffer from travel disruption. War, terrorist attacks and epidemics are luxury's worst enemies," the bank said.

 

   

 



Sofia Celeste
FAIRPLAY Editor-in-Chief

When she is not hunting down the latest in tech and fashion, Sofia Celeste is scouting artisan talent for her online magazine bacoluxury.com. Born in the US and raised on the Pacific Island of Guam, she went on to write for Dow Jones Newswires and the Wall Street Journal. Her work is now regularly published in top fashion publications NOWFASHION and WWD.