Christian Dior Couture Fall 2016

PARISChristian Dior Couture is the latest luxury firm to feel the pain of falling tourist numbers. The French fashion house reported that profit from recurring operations fell 30.2 percent to 74 million euros, or $82.5 million, in the first six months of 2016.

In its fiscal fourth quarter, ended June 30, revenues were down 2.9 percent to 464 million euros, or $524 million, compared with a drop of 0.9 percent in the third quarter. On an organic basis, fourth-quarter revenues were up 0.2 percent, following a flat third quarter.

All dollar rates are calculated at average exchange rates for the period concerned.

Dior chief executive officer Sidney Toledano qualified the performance as resilient and said he felt positive about prospects for next year, following the arrival of Maria Grazia Chiuri as artistic director of women’s haute couture, ready-to-wear and accessory collections.

“We were heavily impacted by tourism flows,” he told WWD, adding strong comparatives were also to blame. “We did see some growth in local markets, but this was clearly not enough in Paris to compensate for the drop in tourists.”

The number of overseas visitors also fell in the rest of Europe, Japan, Hong Kong and Macau, due to factors ranging from terrorist attacks to currency appreciation and local politics. Among the countries that registered an improvement were the U.S., the U.K. and Switzerland.

Global Blue data for June showed that tourist spend dropped 13 percent globally and 16.8 percent in Europe. The Asia-Pacific region posted a 4.1 percent decline after a flat result in May — despite easier comparatives with last year.

The Dior figures were released late Thursday in tandem with results for Christian Dior SA, parent of Christian Dior Couture and the luxury conglomerate LVMH Moët Hennessy Louis Vuitton.

Dior’s results were below those reported by LVMH, which cited a 2.2 percent revenue gain in the second quarter and a 4 percent increase in organic terms.

Toledano noted that Dior’s new flagships opened mainly in the second quarter, with San Francisco bowing in April, Cannes in May and London in June. The Bond Street store was doing well as tourists took advantage of the weak pound and London’s safe haven status, following mass killings in Paris, Brussels, Nice and Munich.

The executive reported U.S. sales grew 12 percent at constant exchange rates in the first six months of the year. Domestic consumption in China also rose during the period. “We will make an effort on local markets in the second half,” he said.

Before the end of the year, Dior plans to open a new location in Harbin, China, and a boutique in Barcelona, Spain. In late September, it is due to christen a stand-alone jewelry store in Paris across from its Avenue Montaigne flagship.

Toledano said that, with the exception of France, local markets were showing signs of improvement in July. He was also banking on the positive performance of the men’s collection, headed by Kris Van Assche, and jewelry collections designed by Victoire de Castellane.

The executive noted that the Dior à Versailles high jewelry collection, unveiled in Paris earlier this month, was already 60 percent sold in value terms. The pieces are being presented to customers in a series of presentations worldwide.

Chiuri is set to show her first rtw collection for the house in Paris on Sept. 30. Since the departure of Raf Simons last October, the brand’s collections have been designed by an in-house team, headed by studio directors Serge Ruffieux and Lucie Meier.

“I am fairly confident regarding the impact. It may take a little while — for sure, it won’t be instant — but I would say that between what is happening in men’s, plus jewelry, I think we will be able to see a trend emerge thanks to local markets. If the tourist market improves, then all the better,” Toledano said.

“We are gearing up for 2017, which is the 70th anniversary of Dior, and under the direction of a woman,” he noted. “She only arrived a few days ago, but there is a great energy in the house.”