Louis Vuitton is reportedly struggling to maintain momentum in China, as the country continues to exhibit a slowing economy and a three-year-long anti-corruption and anti-extravagance political campaign, both of which have triggered a steep fall in luxury consumption. The Paris-based design house has “has closed three of its stores in China, including what was its first outlet in the southern city of Guangzhou, and is expected to shut several more across the country in coming months,” according to the Financial Times. These store closures leave Louis Vuitton with 41 stores across mainland China out of 453 worldwide, according to Exane BNP Paribas. A spokesman for parent company LVMH said Vuitton will continue to invest in its retail network in China, adding that the company will open two stores and refurbish two there in 2016. He declined to comment on closures.
While other reports suggest that the move comes as part of operational restructuring on the part of LVMH Moet Hennessy Louis Vuitton’s most profitable brand, “20 per cent of Louis Vuitton’s stores in China will have disappeared by mid-next year: that is a closing rate of about one store per month,” said Emmanuel Hemmerle, a leadership consultant based in Shanghai. Even so, Louis Vuitton is not alone. In fact, other luxury labels, including Giorgio Armani, Hermès and Versace, among others, have been closing shops in China since 2013. “Closures by other luxury-goods makers may follow, according to Exane analyst Luca Solca. Kering SA-owned Gucci and Burberry, both of which have also struggled in China, have more stores there than Vuitton, according to Exane. Chinese consumers account for about a third of global luxury sales. Gucci has 57 stores in China, while Burberry has 55,” according to Bloomberg.
Jean-Jacques Guiony, chief financial officer of LVMH, said during an earnings call last month that most of the store closures in China would be in the second-tier cities, and further noted that the group’s business in China was down in the third quarter (think: a drop of nearly 6 percent in the first nine months of this year) due to “wild stock market swings.”