Global consulting firm Bain & Company is projecting a 2% contraction in global luxury sales in 2024, representing the first annual decline since the global financial crisis in 2008, barring the Covid-19 period.
This year's decrease, expected to bring the personal luxury goods market to €363 billion, highlights weaker demand in critical markets such as China and South Korea, even as sectors like beauty and eyewear show resilience.
According to the 23rd edition of the Bain & Company Luxury Study, just one-third of luxury brands are expected to post growth for the year, compared to two-thirds in 2023.
“The forecast reflects continued strength in Japan, solidity in southern Europe, and a progressively improving trajectory in the US, but also a rapid slowdown in China and challenging conditions in South Korea,” said the report.
“Globally, the strongest category growth was found in beauty and eyewear. Jewelry was the most resilient core luxury category. Shoes and watches struggled,” Bain added.
Image credit: Bain & Company
Global luxury brands have faced immense profit squeezes amid an evaporation of Chinese luxury demand.
In the UK, Burberry Group PLC (LSE:BRBY) is reportedly on the brink of being acquired by Italian skiwear giant Moncler. Burberry’s shares have collapsed by 57% in the past 12 months.
LVMH, the world’s largest luxury conglomerate, is down more than 17% in the same period, thanks to tumbling revenues across its core segments.
Gucci owner Kering has been one of the worst affected, with shares plummeting nearly 50% in 12 months.
Last month, Kering slashed its full-year income forecasts following a disappointing third quarter.