Violent protests in France may impact luxury sales

The recent violent demonstrations that have rocked France could have “a material impact” on third-quarter sales for Europe’s big luxury groups, and the entire tourism sector.

”The magnitude of this impact will depend on the length of the events,” luxury analysts at Bernstein warned in a research note published Tuesday. “We understand that high-end tourists might be tempted to avoid taking more cancellation or security risks and change their summer destination to more peaceful places in Europe.”

According to Bernstein, France has emerged as the top luxury shopping destination for American and Chinese tourists, grabbing more than a 50 percent share of duty-free spending. In May, duty-free sales in France were 1.5 percent higher than pre-pandemic levels, with more than 85 percent of tax-free shopping occurring in physical stores.

“Besides luxury watches and jewelry, high-end Parisian fashion — Louis Vuitton, Dior and Chanel — is a major draw for overseas shoppers who are willing to travel long distances to indulge in the city’s fashion scene,” the report said. Bernstein noted that similar protests in France in 2005 lasted three weeks and resulted in a 30 percent cancellation rate.

Already, the Office of Tourism in Paris has reported that 20 to 25 percent of tourists canceled trips to Paris within the first week of the riots, sparked by the police killing of a 17-year-old motorist, identified as Nahel M.  “Clearly luxury companies are equipped to receive tourists everywhere, but if riots continue in France, this will put a dent to 3Q23E update, at least for France.”

The riots have scuttled a few fashion events in Paris, including Celine’s spring 2024 men’s show and party, which had been scheduled for July 2. Chloé canceled a planned event on June 30 to celebrate Karl Lagerfeld’s creations for the house, while Courrèges postponed its annual club night, originally scheduled for July 1.

Paris Couture Week, with 32 houses scheduled to reveal their fall 2023 collections this week, has so far proceeded without incident. Balenciaga said it would cancel its “couture celebration” scheduled for Wednesday, although its fashion show will go ahead earlier that day. The evening event was to include a dinner and live performances by Jay-Jay Johanson and Grace Jones.

The Bernstein report included a security alert issued by the U.S. Embassy in Paris urging Americans to “avoid mass gatherings and areas of significant police activity,” and one from the Chinese Foreign Ministry advising its citizens to “pay close attention to the local security situation” and “be cautious when going out.”

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