It’s enough to tell you that Japan represents 11 percent of the global luxury sales to make you understand why the natural catastrophe that has recently hit Japan is also affecting the luxury industry. Japan is the third largest luxury market in the world, right after the United States and China, but since the terrible earthquake last Friday, lavishly spending is not an option anymore in the country. At least not for a wile.
Even though some analysts note that the regions that have been affected by the tsunami are not the most important luxury goods outlets in the country, numbers don’t lie, and they say that luxury shares have dropped considerably. Nineteen percent of Hermes’ sales is ensured by Japan, and so is 12 percent of the sales of Switzerland’s Richemont Group, 16 percent of the sales of PPR Luxury Business Group (which owns Yves Saint Laurent and Gucci), and 9 percent of LVMH (which owns luxury brands like Donna Karan, Louis Vuitton and Moet Hennessy).
Now LVMH stock went down 3.3 percent, Burberry stock is down 5.45 percent, PPR down 1.75 percent, Hermes down 2.12 percent, Richemont down 2.3 percent, Tod’s down 1.19 percent, and Finnish house Marimekko went down 3.6 percent.
Another dark cloud over the luxury market comes from the nuclear accident in Japan. If this disaster affects the global mood, then all the luxury goods companies will have to suffer badly, because “luxury sales depend on people’s confidence”, as Swiss asset manager Sarasin said in a note.