THE CHEAT SHEET

The World According to LVMH

Louis Vuitton's Michael Burke at the atelier, where hospital gowns are now being made | Source: Courtesy

• LVMH reports first-quarter financial results on April 16
• The owner of Louis Vuitton, Celine and other brands said in late March that it expects Covid-19 to cut Q1 sales by up to 20 percent
• The luxury conglomerate initially downplayed the coronavirus threat but has since taken drastic steps to address the crisis

LVMH had changed its tune by late March, predicting a 10 percent to 20 percent drop in Q1 revenue compared with the same period in 2019. Last week, Louis Vuitton started making hospital gowns at its ready-to-wear atelier, an admission that life won't be returning to normal anytime soon (while also making it easier to restart regular production once the pandemic subsides).

The Bottom Line: All brands can do is wait out the pandemic. LVMH, with its enormous scale and pile of cash, is better equipped to do this than virtually any other company in fashion. 

The Lockdowns Drag On

Debenhams store on Oxford Street in London | Source: Getty Images

• The UK government will decide this week on how much longer to extend a nationwide lockdown
• Covid-19 deaths topped 100,000 on Friday, though the pandemic shows signs of peaking in some hotspots, including Italy, Spain and New York
• McKinsey and BoF's updated State of Fashion report predicts a 35 to 39 percent drop in global fashion sales

China Returns to Normal, Sort Of

Angel Chen's Fall/Winter 2020 VR show | Source: Courtesy

• China has lifted its lockdown, but fashion trade shows and events such as Shenzhen Fashion Week scheduled for this week will take place online or be postponed
• One survey by a Chinese retail association found that virtually all stores had reopened, but only 60 percent of malls showed foot traffic at 50 percent or more of normal
• Chinese retailers are discounting at roughly the same level as last year, indicating they are not resorting to markdowns to draw customers, according to data analytics firm Edited

Fashion is heavily invested in a successful Chinese recovery. For starters, many brands are depending on Chinese consumers to pick up where they left off, and hopefully make up for lost sales in the West, where lockdowns continue. The industry is also observing how China rebounds as it prepares for Europe and the US to reopen this summer. Will virtual fashion weeks in Shanghai and Shenzhen prove a model for New York or Paris? When stores reopen, what will it take to get customers to come back? Which e-commerce and marketing innovations dreamed up to reach self-isolating consumers during the pandemic will prove useful after lockdowns are lifted?

The answers to these questions will trickle in over the next few weeks. Then it will be time for brands in the US, UK and continental Europe to mount experiments of their own.

SUNDAY READING

Professional Exclusives You May Have Missed: 

• Beauty booms in the Zoom era
• How five very different brands are managing e-commerce right now.
• For luxury, an acceleration of the inevitable.
• How will the jewellery market weather Covid-19?
• Governments have promised small business loans. Getting them isn't easy.
• Is this the end of wholesale, or the beginning of something better?
• The dos and don'ts of marketing during a pandemic.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com. 

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