LONDON — Swine flu could be the next blow to Europe’s luxury goods stocks, which have already taken a beating in the economic downturn.
Shares in Burberry Group, Compagnie Financière Richemont SA, Bulgari SpA, LVMH Moët Hennessy Louis Vuitton and PPR all fell on European stock exchanges Tuesday, the same day it was confirmed the virus had spread further afield from Mexico and the U.S. to countries including Canada, France, New Zealand, Israel and Britain.
On Wall Street, the threat of a pandemic has had a mixed impact, with some shares rising and others falling, depending on the sector. Retail shares improved modestly despite five more confirmed cases of the disease in New York City, for a total of 45.
London-based Sanford Bernstein analyst Luca Solca issued a research note Tuesday suggesting swine flu could affect luxury goods sales, particularly if international travel is restricted. The note explored the possible effects of swine flu on the sector based on the assumption the virus “will be similar in magnitude and seriousness to the 2003 SARS outbreak.”
Solca added he expects the World Health Organization to recommend travel restrictions following the outbreak. “Luxury goods sales are impacted by changes in international travel,” Solca wrote. “Our ballpark estimate is that [around] 20 percent of luxury products are purchased by people traveling for some reason. [Recommended travel restrictions] would in turn cascade into corporate travel restrictions and independent travel curbs, with the obvious negative impact…on luxury goods sales.”
The U.K.’s Foreign Office on Tuesday advised against all nonessential travel to Mexico, as did the U.S. Centers for Disease Control and Prevention.
“How the virus affects luxury goods depends on how serious [the virus epidemic] is,” said Solca. “Assuming swine flu is like SARS — i.e. far from devastating but serious enough — the more probable risk for luxury goods stocks is short-term weakness and extended range-bound trading.”
Burberry’s shares closed down 3.3 percent at 381 pence, or $5.56, Tuesday, while shares in Richemont fell 4.92 percent Tuesday to 19.89 Swiss francs, or $17.26 at current exchange. LVMH shares fell 2.9 percent to close at 55.51 euros, or $73, in trading on the Paris Bourse, while PPR declined 4.8 percent to 58.49 euros, or $76.92.
In Milan, the S&P/Mib index closed down 1.5 percent to 18,541. Shares in Bulgari dropped 3.9 percent to 3.87 euros, or $5.09, while Luxottica Group SpA slipped 2.3 percent to 13.71 euros, or $18.03, and Tod’s SpA fell 2.7 percent to 39.17 euros, or $51.51. Mariella Burani Fashion Group SpA was the day’s biggest fashion loser, sliding 7.4 percent to 5.10 euros, or $6.70.
Troubled eyewear firm Safilo Group SpA bucked the downward trend, gaining 0.6 percent to 0.44 euros, or 58 cents, a day after chief executive officer Roberto Vedovotto said talks between majority shareholder Only 3T SpA and four private equity funds were ongoing and a deal could be reached before the summer.
In Japan, the Nikkei 225 fell 2.7 percent to 8,493.77 on growing doubts about earnings prospects and a strengthening yen. Department store Isetan Co. Ltd. fell 1.5 percent to 839 yen, or $8.68, and rival Takashimaya Co. Ltd. slipped 0.8 percent to 629 yen, or $6.50, while Uniqlo-owner Fast Retailing Co. Ltd. dipped 1.6 percent to 9,950 yen, or $102.9.
Across the Pacific, the S&P Retail Index rose 0.6 percent, or 2.08 points, to 334.74, as the Dow Jones Industrial Average slid 0.1 percent, or 8.05 points, to 8,016.95. Among the top retail gainers for the day were Caché Inc., up 14.7 percent to $4.30, and The Talbots Inc., ahead 12.9 percent to $2.27. Although swine flu wasn’t the dominant consideration on Wall Street, in Sacramento, Calif., California Gov. Arnold Schwarzenegger declared a state of emergency and asked Washington for an additional $1.5 billion to fight the virus.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast