Hunger For Luxury: American Consumers Are Spending In Europe Like There's No Tomorrow

There is a hunger for luxury goods made by famous fashion brands. American consumers are traveling in Europe and spending "like there's no tomorrow".

Wealthy tourists coming to Europe are expected to boost sales of luxury groups LVMH, Kering, and Hermes in the second quarter of 2022, helping them offset the impact of COVID-19 restrictions in China, Reuters reports.

Fashion houses in France and Italy are seeing a post-pandemic uptick in demand, while buyers are still spending their savings made during the restrictions, despite market turmoil and rising prices.

The depreciation of the euro against the dollar, which is likely to boost earnings for luxury groups in Europe, is encouraging US visitors to spend more.

LVMH, Kering, and Hermes Are Expecting Huge Sales

"American consumers are traveling to Europe like there's no tomorrow," says Mario Ortelli of luxury mergers-and-acquisitions advisory firm Ortelli & Co, predicting they will increase luxury sales on the continent.

"We continue to see outsized high-end demand in the market, as consumers of all nationalities emerge from the pandemic in a [you-only-live-once] mood. This has yet to normalize," says Luca Solca, an analyst at Bernstein.

However, restrictions in China still cast a shadow over earnings in the second quarter of 2022.

According to Barclays estimates, in the luxury segment, sales in China fell 40% between April and June 2022, while global sales rose about 11%, half the pace of the previous quarter.

Last year, the US overtook Europe to become the world's largest luxury market, attracting investment in new stores from European brands.

UBS analysts expect second-quarter sales growth of 17% at LVMH, 12% at Kering, and 16% at Hermes.

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