A decline in sales of new designer good is impacting luxury fashion houses but benefiting the secondary market – with one New Zealand reseller selling more than $1 million worth of handbags in the financial year just ended.
Kering Group, the owner of Gucci, Yves Saint Laurent, Bottega Veneta and Balenciaga, posted an 11 per cent decline in group sales in the first quarter of this year, citing challenging conditions in the Asia Pacific region.
It warned investors this week that its first-half operating income will fall by up to 45 per cent compared with the previous year.
It follows an estimated 10 per cent increase in luxury spending last year, worth an estimated €1.5 trillion ($2.7t) according to Bain and Company’s Luxury Study, propelled by tourist purchases in Asia and Europe.
The world’s leading luxury goods group, LVMH Louis Vuitton Moet Hennessey, made record revenue of €86.2 billion ($155.3b) last financial year – it profited a quarter of that.
The French group, which also owns Christian Dior, Cartier and Van Cleef & Arpels, pushed through price increases last year, yet still experienced a 40 per cent revenue rebound in the Asia Pacific region.
“Last year, I believe they raised three or four times. Every time is about 3 to 5 per cent. The baseline is already $3000 to $5000 a bag,” owner of Auckland designer handbag reseller Luxury Trade, Jane Li, told Markets with Madison.
She said that was putting off even wealthy customers off purchasing luxury handbags at full price.
They were looking for value in the secondary market instead, “because of how many items they buy”.
Li listed new handbags on her website daily, and sold 10 handbags a day on average.
Her business had experienced double-digit percentage revenue growth over the past two years – it just surpassed $1 million in annual e-commerce sales.
Watch Jane Li explain the luxury trade, including how she ensures authenticity, in today’s episode of Markets with Madison above.
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Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.
Madison Reidy is the host of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
