Cyclical recession

A fixed cost industry: brand communication, flagship stores all over the world, and a great deal of expenditure on staff expenses and operations.

The luxury business itself is cyclical. Once the sales are slowing down, it is possible that the profit margins will fall seriously.

The gap between the rich and the poor has narrowed.

Generally speaking, the greater the gap between the rich and the poor, the better the sale of luxury goods, because the rich always want to show their identities through shopping.

However, the marginal tax rate has narrowed the gap between the rich and the poor.

The rich earn more and they pay more taxes.

So luxury goods are not so good.

The austerity of the euro zone and the fall in China's housing prices make people feel that they are not very rich and can't buy and buy with the sex.

China's economic slowdown

10 years ago, China was right.

The contribution rate is only 3%, but now it has reached 30%.

China's market will affect global luxury sales.

Tax rate change

In Europe and the United States, sales of luxury goods are affected by marginal tax rates, which could be eliminated by markets like Russia and China, but China may also increase tariffs and luxury consumption tax.

Currency fluctuation

European luxury market is usually settled in euros or Swiss francs. Income is generally settled in US dollars or US dollar related currencies. The appreciation of the euro led to a gloomy market for luxury goods in the first 9 months of 2014, but fortunately the dollar was strong and the rest of the industry was back to life.

Similarly, the contribution rate of luxury goods is in the Japanese market of 10% - 15% yen. The collapse of the Japanese yen is also a great blow to the luxury market.

Everyone is afraid of traveling.

"A journey of going for a walk" may be an illusion. Globally, worldwide epidemics and terrorist attacks have reduced people's travel opportunities, and travel consumption is very important for luxury goods.

In the past 20 years, the 4 opportunities for financial investors to buy luxury goods 4 times were: "9 11", the Asian financial crisis in the late 1990s, SARS in 2003, and the bankruptcy of Lehman brothers in 2008.

The most expensive cities are experiencing problems.

Hongkong

Very large, accounting for 10% of the world's soft luxury goods and 20% of hard luxury goods, "Zhong Zhong" has affected the sales of luxury goods.

Similarly, the French weekly Charlie magazine also affected the luxury sales in France.

Luxury is no longer mysterious.

With the rapid expansion of the brand and the opening up of stores and sales promotion, many luxury brands are facing the problem of dilution of brand value. Overexposure has made the brand more and more mediocre, and consumers will be far away from this brand. (Paris bank cited Coach example).

And when sales fall, it's hard to maintain the style.

Merger and acquisition

The high price of a company's acquisition may affect the rate of return on capital of the company.

In 2007, luxury group opened its sports brand Puma with 5 billion 200 million euros (about 37 billion 95 million yuan), and the gross profit margin of sports apparel was far less than that of luxury goods. Later, Puma dragged down the overall valuation of Kering.

The Bank of Paris believes that such mergers and acquisitions are risky.

(China shoes net - the most authoritative and professional shoe business information center.