From the luxury outlook in China to the GOAT gymnast smashing records – here's your weekly round-up

China’s economy is seeing a slowdown, and it’s a big problem for luxury brands. 

From the luxury outlook in China to the GOAT gymnast smashing records – here's your weekly round-up
Source: Pexels/Rahib Hamidov

🤔What’s going on?

China’s economy is seeing a slowdown, and it’s a big problem for luxury brands. 

The nation’s economy grew by 4.7% in the second quarter of this year, which missed expert forecasts of 5.1%. It was also a dip from the 5.3% growth that was reported in the first quarter of 2024 and a big drop from the 2010s, when the country’s GDP consistently grew by between 6-10% every year. 

Most recently, corporate earnings reports for luxury companies haven’t been so great when it comes to sales in China, as the nation’s sluggish economy has created a real drag on the appetite for expensive purchases, especially from European brands.

“The biggest challenge facing fashion brands is how to differentiate themselves in what is an ever-developing space. Of course, aesthetics play a part, but ultimately it is the customer experience that will be remembered and aid in developing brand loyalty,” explained Robert Lockyer, the Chief Client Officer for Delta Global, a high-end retail packaging company, to TMS. 

👜What are some of the numbers?

LVMH, the largest luxury conglomerate in the world, reported on July 23 that the company only grew by 1% in the second quarter of this year. On its earnings call, it said that the slow growth was driven by tightening wallets in China. Chinese consumers who are searching for discounts are also traveling to Japan to buy luxury items for less because of the weaker yen, hurting the group’s profits. 

Richemont, which is owned by Cartier, reported a 27% drop in sales in China, Hong Kong and Macau for its second quarter, and it barely recovered enough in other markets to cover the sales slowdown.  

❓What does this mean?

According to consumer insights agency Canvas 8, the economy’s slowdown is changing people’s shopping behaviors. 

For example, more young people are looking for deals through secondhand luxury sales. Others are even flaunting “virtual bling,” which is where they photoshop luxury items into their pics so they can flex without having to spend a cent. 

With that said, though, brands that have switched up their offerings and strategies have found some success. Prada’s Miu Miu, a sister luxe brand that positions itself as more youthful, affordable and playful, grew by 89% in the first quarter of 2024 in retail sales compared to 58% in 2023. Miu Miu has become super popular in China, rising on Weibo’s Hot Search List. This increased popularity in Asia also boosted Prada Group’s overall net revenue by 16%.

🌏The bigger picture

Back in 2022, China’s luxury market contracted for the first time in five years with a 10% decline. That’s a pretty big deal when you consider it tripled in size from 2017 to 2021, according to Bain. And even though there was a bit of a “revenge shopping” rebound after COVID restrictions were eased, it was short-lived, mainly because of the slumping real estate market and slower-than-expected economic recovery. And now, major luxury brands like LVMH and Kering (the owner of Gucci) have reported sales declines in China this year. Even traditional gift-giving seasons, like the Lunar New Year, haven’t done much to boost luxury spending.

According to consultancy Bain, last year, China made up 16% of the world’s luxury sales, which comes out to a whopping US$63 billion. But this is still a drop compared to before the pandemic, which hit China’s luxury market hard. 

Now, some analysts are predicting things won’t get better in China for luxury brands anytime soon because of lingering economic uncertainties and people being more cautious with their spending. But other experts expect some mild growth in the near future and are even more optimistic about the market’s long-term outlook, especially if companies adapt well to the changing landscape. 

Ultimately, though, there are a few factors at play here, but three big ones stand out – tightening budgets due to China’s economic slowdown, a crackdown on “wealth-flaunting” and a growing individualism among younger generations.

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Some of the biggest Headlines this week

🤝US-Russia prisoner swap: The Wall Street Journal reporter Evan Gershkovitch has been freed from Russian prison, along with former US marine Paul Whelan and 22 other detainees in a prisoner swap between the US and Russia. Turkey said it helped mediate the exchange, which was one of the biggest between the West and Russia since the Cold War and involved several different countries.

🚣North Korea flooding: Earlier this week, a river on the Chinese border with North Korea caused flooding in the country, submerging thousands of buildings and homes. More than 5,000 people in northwestern North Korea were rescued and evacuated from the area. On Thursday, South Korea offered to send aid, but it’s not clear whether North Korea will accept any of that help.

✂️Fed cuts?: US Fed Chair Jerome Powell as said an interest-rate cut could come as soon as September. “The question will be whether the totality of the data, the evolving outlook, and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market,” Powell told reporters on Wednesday. This could mark the end of a more than two-year-long fight against inflation that has kept rates steadily high.

📈Tech earnings rundown: A lot of big tech companies reported earnings this week. Some of the major developments include Apple’s return to growth, with it reporting iPhone revenue that beat expectations and helped make up for sales declines in China. Microsoft’s earnings were along the lines of what was expected, although it disappointed in its cloud revenue numbers. Meta reported a profit of US$13.5 billion, beating estimates and sending its shares up almost 7% with the news. Amazon’s report was weaker than expected, and it issued a not-so-rosy guidance, sending its shares down.

🥊Musk vs. Maduro?: Nicolás Maduro was elected president of Venezuela again, and there have been widespread protests in the country as people have questioned the results and said the election was rigged. Elon Musk chimed in quite a bit this week, writing “Shame on Dictator Maduro” on X, among many other posts. Maduro responded, calling Musk a “murderer” and later challenging him to a fight. Musk responded, “I accept,” and said if he wins, Maduro must resign. 

💰Missing Hermès fortune: Nicolas Puech, the heir to a hefty chunk of the Hermès luxury fashion empire, is in a bind after discovering his fortune has seemingly vanished. Once valued at US$13.6 billion by Forbes, he surprised everyone last year when he announced he planned to leave about half his fortune to his gardener. But, apparently, Puech no longer owns the Hermès shares he thought he did. He blamed his former wealth manager, Eric Freymond, saying he was the one that handled everything. Still, an appeals court dismissed that claim, pointing out that Puech had signed a bunch of blank documents over to Freymond, giving him control of the accounts. Puech's new legal team is still looking into the situation, so this battle may not be over just yet.

🍕Hong Kong fencing fiasco: At the Olympics this week, Hong Kong's Cheung Ka-long closely beat Italy's Filippo Macchi 15-14 in a men's foil fencing match, sparking some drama that led to a formal complaint from Italy. The match decision, which took three replays to confirm, was criticized by Italian fans who said it was unfair, leading them to flood Cheung's social media with protests. In response, Hong Kong supporters trolled Italian food online, saying they loved pineapple on pizza (something Italians typically frown on). A Hong Kong Pizza Hut ad featuring a pineapple-topped pizza and an offer to add pineapple to pizza for free was also trending. In the middle of all this bickering, Macchi called for people to respect the ref’s decisions, saying he knew both of them and didn’t think they were to blame.

Source: Instagram

🏠Discounted Hong Kong mansions: Hong Kong, once known for having the most expensive home sold in Asia, has been dealing with a slumping real estate market for a few years now. This year, other economic headwinds have put pressure on some wealthy homeowners to sell at a loss so they can free up cash to pay down debts. According to Savills, some of the homes have sold for more than 50% less than what they were worth in 2018. The buyers snapping them up are mostly cash-rich, making them able to close the deal quickly. According to data from CBRE Group, about three-quarters of the homes that were worth more than US$10 million were sold by owners strapped for cash.

⚽Mbappé buys football club: Football star Kylian Mbappé, recently signed by Real Madrid, has become the majority shareholder, with an 80% stake, of French second-division club SM Caen. The club's chairman, Pierre-Antoine Capton, and his holding company PAC Invest will hold on to their 20% stake. While the specific numbers weren’t released, some reports estimate the deal is worth between €15-20 million (US$16-21 million).

🤸‍♀️Simone Biles back on top: American gymnast Simone Biles is a legend in her sport, but she caught a lot of flak when she pulled out of the Tokyo Olympics in 2021 because of a bad case of the “twisties” (that’s when a gymnast gets disoriented while flipping around, which can be dangerous). While Biles wondered if her career was over, she qualified again to compete in the Paris 2024 Olympics. On Thursday, Biles made history as the first American gymnast to win gold twice in the all-around final. It’s safe to say that her reputation as the GOAT of gymnastics is well deserved – she’s the most decorated gymnast in history, with nine Olympic medals (six gold, one silver, two bronze) and 30 World Championship medals (23 gold, four silver, three bronze).


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Written and put together by Kevin McSpadden, Christine Dulion, Elize Lanorias and Krystal Lai.