China’s broader economy may be struggling, but that doesn’t seem to be stopping consumers there from splurging on more luxury clothes.
China’s inflation statistics for January indicated that prices fell by a “concerningly low” 0.8 per cent from the same month a year earlier. This was the largest loss since the end of the financial crisis in the autumn of 2009, and it was also the fourth consecutive month of declines.
Although the US economy has recently shown signs of rebounding, several fashion businesses’ quarterly reports indicated that American consumers are becoming more frugal and higher-end Chinese consumers are spending more on clothing.
Luxury companies applauded the development even if the improvements in China are coming off a low base because COVID-related shutdowns reduced performance a year ago.
Sales of luxury clothing brand Ralph Lauren increased 30 per cent in China, while Coach parent Tapestry witnessed a 19 per cent increase in sales. Hermès International SCA, a Paris-based retailer of high-end clothing and accessories, revealed a 13 per cent increase in fourth-quarter revenue. A 19 per cent increase in revenue from Asia—aside from Japan—helped with that.
Ralph Lauren Corp., a luxury lifestyle products company with headquarters in New York, revealed third-quarter fiscal sales that increased 5.6 per cent over the previous year. However, revenue from Asia climbed 16 per cent, with China sales rising more than 30 per cent, while revenue from North America remained essentially unchanged.
The China growth “was ahead of our expectations, even with last year’s easier compares due to the surge in COVID cases,” Ralph Lauren Chief Executive Patrice Louvet said.
The company that owns Coach and Kate Spade, Tapestry Inc., reported a 2.9 per cent increase in revenue for its second fiscal quarter, which concluded on 30th December. According to Tapestry, revenue from North America was “in line” with the same period last year, while sales elsewhere rose 12 per cent. The company added that the “strong” growth outside of the United States was mostly driven by a 19 per cent increase in revenue from Greater China.
“We’ve continued to see an uptick in travel spend from mainland China tourists with increases across Asia and Europe,” said Tapestry Chief Financial Officer Scott Roe on its earnings call.