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Observations In Luxury

Solid sales growth for luxury brands during 2023’s third quarter – but are labels set for a winter discounting spiral?

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Dec 28, 2023

As a New Year looms, reports continue to filter through showing a mixed picture for many luxury-sector participants. So, let’s begin with the good news as far as many observers will be concerned: the third quarter of 2023 saw three major high-end brands record sturdy growth in their sales. 

More specifically, for Hermès International, the Q3 period saw a 22% increase in revenue to €10.06 billion, compared to the same time in 2022. Sales, meanwhile, went up by 16%, reaching €3.37 billion. 

There was similarly good news to report at Hugo Boss, which said it had enjoyed a 15% increase in sales to €1.03 billion, as well as at LVMH. The French conglomerate that counts the likes of Louis Vuitton, Christian Dior, and Givenchy among its represented brands, managed organic revenue growth of 14% over the course of the third quarter. 

But the turbulence seems to be accumulating for many big names in the festive season 

Even as early as Q3 2023, there were indicators that some major players in the luxury market could be encountering tougher times than the aforementioned data might have given the impression of. 

The French brand Kering SA, for instance, reported third-quarter sales of €4.46 billion, which was 13% down on the €5.14 billion that had been seen last year. The Gucci and Balenciaga owner’s revenues, meanwhile, declined by 9% on a comparable basis. 

And that is before one considers a recent Reuters report entitled “Luxury slowdown prompts fears of inventory pile-up over key holiday season”. The news agency said that certain high-end fashion retailers had been offering discounts even relatively early during the holiday shopping season, which had “raised concern that a lacklustre Christmas could lead to inventory gluts – potentially dragging labels into a discounting spiral that could cheapen their image.” 

Sure enough, recent US credit-card data from Barclays indicated that expenditure on high-end goods remained negative during November, a 15% year-on-year decline having been recorded, following a 14% fall in October. 

This was backed up by credit card data from Citi, which showed that compared to the same time in 2022, purchases of luxury fashion dropped by 9.6% in November. This came after an 11.4% decline had been seen the previous month. 

Reuters quoted one consultant as stating that retailers had gone into the winter season with too much inventory, noting that “they’ve already begun the season with overstock, compared to normal levels.” 

That perhaps shouldn’t be an overly big surprise from today’s perspective, given that last year’s purchasing orders were made prior to the sector beginning to cool off after a long, months-long post-pandemic resurgence. 

Are you positioning your high-end brand to ride the ups and downs of 2024? 

The good news is that even in light of the challenging backdrop painted by the aforementioned data, there is still scope for prestige brands to impress, innovate, and make important growth breakthroughs. However, news stories like the above also illustrate that participants in this intensely competitive sector must continue to be highly alert and proactive in their growth efforts. 

So, whether you are seeking out the most capable digital and strategic experts, assistance with your brand’s ecommerce presence, or even simply a leading luxury social media agency, you can be sure that you will be positioning your brand strongly when you partner with Skywire London. 

Enquire today to our London-based, but globally minded team via email, and we will be delighted to discuss the possibilities for how we could most effectively collaborate with you. 


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