Fashion Industry Facing Financial Disaster

While the world of fashion may feel almost alien right now, Gucci and Prada announce the cancellation of Cruise Collection shows. With global store closures, it has been estimated that expected losses for the industry, could result in reducing 2020 sales to as low as €309 billion.

THE announcement that luxury power-house Gucci has postponed its Cruise Show, due to take place on May 18 in San Francisco, has been followed by further bad news for the fashion industry. Speaking with WWD, Gucci explained its decision as “the ongoing uncertainty prompted by the coronavirus outbreak, as a precautionary measure. A decision on the new timing and location of the show will be announced at a later date, once the situation becomes clearer. At this time, our thoughts are with all of those affected around the world.” Similarly, Prada have taken steps to postpone its show, scheduled to take place on May 21 in Tokyo.

Originally Burberry stated fears of a “material negative effect” on sales due to the situation in China. More recently, an updated statement explains the situation has escalated globally and the negative effect: “has intensified and is now impacting the industry in all regions.” Since the beginning of the year, reported store sales are down 40 per cent to 50 per cent, while further store closures will undoubtedly lead to further losses. Crushing news, as from mid January sales forecasts for 2020 were looking strong.

The hope remains, that some shoppers will, in turn postpone purchases. However, with the fashion industry, and its followers being notoriously fickle when it comes to trends, could it just be wishful thinking.

According to the LVMH website – “LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, recorded revenue of €53.7 billion in 2019, up 15 per cent. Organic revenue growth was 10 per cent. Europe and the United States experienced good growth over the year, as did Asia, despite a difficult environment in Hong Kong in the second half of 2019.”

The site also stated, that Spanish brand Loewe, “delivered strong growth under the impetus of its designer JW Anderson.”

As always with high-end fashion, it finds its way to the high street. Chains Zara and H&M have halted production due to store closures. While sports brand Adidas is expecting sales in China to fall by more than half in the first quarter.

Meanwhile, online shoppers are finding bargains, with 70-80 per cent discounted stock selling slowly on websites, including luxury brands.

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Written by

Gavin Lambe-Murphy

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