Bain ex­pects 2-4pc growth this year led by stronger spend­ing in Europe and China

New Straits Times - - Business -

PARIS group Bain & Co and Ital­ian lux­ury in­dus­try as­so­ci­a­tion Al­t­agamma showed.

The lux­ury goods sec­tor has suf­fered in the past cou­ple of years from fewer tourists com­ing to Europe af­ter a wave of mil­i­tant at­tacks on the con­ti­nent, less busi­ness in Hong Kong and slow­ing de­mand in China.

In Oc­to­ber, Bain had fore­cast 2017 growth of one to two per cent for the lux­ury sec­tor, but the in­dus­try man­aged to grow four per cent year-on-year in the first quar­ter.

“Af­ter a dif­fi­cult 2016, the first quar­ter of this year brought some re­lief to the lux­ury in­dus­try. The con­tin­u­ous repa­tri­a­tion of Chi­nese con­sump­tion as well as a pos­i­tive out­look in Europe both for lo­cals and tourists will help drive over­all mar­ket growth dur­ing the re­main­der of the year,” said Bain part­ner Clau­dia D’Ar­pizio.

Bain does not name spe­cific com­pa­nies, but in the first quar­ter of this year lux­ury giants LVMH, Ker­ing and Her­mes all posted strong re­sults.

Bain part­ner Fed­er­ica Le­vato, an­other of the au­thors of the re­port, said: “It’s a health­ier growth than be­fore. So we have re­vised our mar­ket fore­cast for this year. Some play­ers who are do­ing well are really out­per­form­ing.”

Europe, which is start­ing to see tourists re­turn­ing, is ex­pected to be the fastest grow­ing mar­ket for lux­ury goods this year, with sales seen up seven to nine per cent.

Bright spots were Spain, seen as a rel­a­tively safe des­ti­na­tion, and Bri­tain, ren­dered more af­ford­able to tourists af­ter a postBrexit slump in ster­ling, while main­land China was also re­cov­er­ing with six to eight per cent growth, said the re­port.

Bain pre­dicted that sales in the rest of Asia could shrink two to four per cent this year.

Hong Kong, Ma­cau and Sin­ga­pore are on the mend but Tai­wan and South­east Asia face a fall in tourist num­bers from China and South Korea, while Ja­pan was seen as stay­ing flat. Reuters

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