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The luxury world continues to take drastic measures regarding its brands in Russia, as the Russia-Ukraine conflict continues.
After Hermès, LVMH and Kering announced last weekend the “temporary” closure of their stores operating in Russia due to the war in Ukraine, the three stocks lost more than 5% in early trading this Thursday morning. LVMH still has 124 outlets throughout the country, “but this volume must be put into perspective in view of the size of the group and its multiple activities,” wrote the analysis office of Invest Securities this morning. LVMH said it would continue to support its Russian employees by ensuring the maintenance of salaries.
Luxury moves away from Russia
This week, it was the turn of Baccarat crystal factory to announce “that it has decided to temporarily halt deliveries to its partner stores in Russia from March 8” in a post on social networks. “The Russian market is not a huge market for the group as are the U.S. or Japanese markets, but it is an important market, a market in the process of opening” explains Eric Rogue, representative of the trade union (CFE-CGC, CFTC and CGT). “I don’t have the exact figures, but I think this market represents 9 to 10% of our turnover.”
As for champagne and spirits, after losing the right to use their name, prohibited in July 2021 by Vladimir Putin in an amendment to the law on the regulation of alcoholic beverages, it was quite logical that the drink is no longer exported to Russia. Moët Hennessy, owned by LVMH and the main exporter of champagne to Russia, has closed all its stores in the country since March 6. Lanson, the fourth largest exporter to Russia with 130,000 bottles shipped in 2021, cancelled last week its planned visit to its local importer, and suspended its upcoming shipments. “The ruble is collapsing and the economic sanctions will ruin the country. It’s simple, our importer is being held hostage by his government but he can’t really speak out. I expect a very strong slowdown, even a complete stop of our operations in Russia“, predicts François Van Aal, president of Champagne Lanson.
Consequences and the Russian luxury market
For champagne, the loss of the Russian market represents only 35 million euros per year, a drop in the bucket compared to the 4.2 billion euros of sales of the profession in 2020. Ukraine, another lost market, represented 184,000 bottles shipped (5.1 million euros in value) in 2020. “The war affects our morale more than the volume of our sales,” confirms François Van Aal.
With the crisis of Covid-19, the luxury business has nevertheless been doing well and is reporting very good profits in 2021. A growth largely driven by the public of emerging countries, China in the lead, but also Brazil and Russia. For luxury groups, it is necessary to act on a case by case basis. As an example, Hugo Boss, estimates more than 60% of its revenues in the region, when other groups make anecdotal figures there and will be less impacted.
In 2017, Contactlab and Exane BNP Paribas estimated 6% of global spending in the luxury sector by Russian customers. Some groups report little speculative ground : Kering / Burberry announced that it only derives 2% of its revenue from Russia, while LVMH only touches 1%.
Read also > PARIS: FASHION WEEK, INTERMEDIARY OF A MESSAGE OF PEACE IN FRONT OF THE RUSSIAN-UKRAINIAN CONFLICT
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The luxury world continues to take drastic measures regarding its brands in Russia, as the Russia-Ukraine conflict continues.
After Hermès, LVMH and Kering announced last weekend the “temporary” closure of their stores operating in Russia due to the war in Ukraine, the three stocks lost more than 5% in early trading this Thursday morning. LVMH still has 124 outlets throughout the country, “but this volume must be put into perspective in view of the size of the group and its multiple activities,” wrote the analysis office of Invest Securities this morning. LVMH said it would continue to support its Russian employees by ensuring the maintenance of salaries.
Luxury moves away from Russia
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The luxury world continues to take drastic measures regarding its brands in Russia, as the Russia-Ukraine conflict continues.
After Hermès, LVMH and Kering announced last weekend the “temporary” closure of their stores operating in Russia due to the war in Ukraine, the three stocks lost more than 5% in early trading this Thursday morning. LVMH still has 124 outlets throughout the country, “but this volume must be put into perspective in view of the size of the group and its multiple activities,” wrote the analysis office of Invest Securities this morning. LVMH said it would continue to support its Russian employees by ensuring the maintenance of salaries.
Luxury moves away from Russia
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