For the top names in luxury fashion, the pandemic doldrums appear to be firmly behind them—except in Europe, that is.
Hermès today posted stellar first-quarter results (pdf) with sales growing above pre-pandemic levels. It adds to a series of strong performances from top names in luxury fashion including LVMH, the mega-conglomerate that owns labels such as Louis Vuitton and Christian Dior, and Kering, which owns Gucci, Saint Laurent, and others. “This is a confirmation of a buoyant luxury goods demand environment worldwide, and a sharp V-shaped exit out of the Covid-19 pandemic,” Bernstein, an investment firm, said in a note to clients about Hermès’s earnings today.
The recovery hasn’t happened everywhere though. Sales in Asia may be taking off, and business in the US is bouncing back strong, but in Europe, home to these giants and the cradle of the modern luxury fashion industry, the struggles continue.
Through the end of March, new cases of Covid-19 spiked in the region, where the rollout of vaccines has been “unacceptably slow,” according to the World Health Organization. Luxury sellers are still contending with numerous store closures.
On top of that, tourist traffic has vanished and seems unlikely to rush back anytime soon. It’s had a noticeable effect on luxury shops, which do a significant share of their sales to traveling shoppers from countries such as China and the US. With tourism to Europe still on pause, these shoppers are making their purchases closer to home, contributing to the uneven sales across regions.
Even before the pandemic, Europe’s fashion houses were growing increasingly reliant on China for their sales. The past year has only accelerated the trend.