A testament to the current globalized economic landscape, new research from Barclays suggests that the recent Ebola crisis could have a “short, sharp negative impact” on the worldwide luxury goods industry and financial markets as a whole.
Purchases by tourists while abroad now account for as much as 50 percent of all luxury goods sales, backed by an influx of Chinese consumers traveling outside of their homeland more than ever before. Because global medical outbreaks have historically sparked declines in travel and tourism, Barclays was able to make its predictions regarding the current Ebola crisis. For example, during the SARS outbreak in 2002, stocks in Barclays’ luxury index declined 21 percent.
As the luxury goods industry is built on foundations of excess, not necessity, it often finds itself hard-hit in times of uncertainty. The financial crisis of 2008 famously saw decreases in sales, massive job cuts and slows in recruitment, and delayed or canceled store openings for many brands and labels.
The Barclays report calls out European companies who are dependent on wholesale and hard luxury as the most vulnerable, including brands like Swatch, Richemont, Tod’s, and Hugo Boss, while noting leather goods makers showed more resilience than watch and jewelry companies. Retailers with little-to-no wholesale business, such as Louis Vuitton, are under even less of a threat of impact.
[via WWD]
