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| Shuttered Stores, Fewer Tourists: Luxury Feels Coronavirus Effects | Shuttered Stores, Fewer Tourists: Luxury Feels Coronavirus Effects |
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| LONDON — Chinese tourists normally flock to Bond Street, home to some of the most expensive retail space in the world. They gather behind the velvet ropes outside the Gucci store or emerge from the flagship boutiques of Chanel and Louis Vuitton with stuffed shopping bags. | LONDON — Chinese tourists normally flock to Bond Street, home to some of the most expensive retail space in the world. They gather behind the velvet ropes outside the Gucci store or emerge from the flagship boutiques of Chanel and Louis Vuitton with stuffed shopping bags. |
| This week, however, there were next to none. The scene was replicated on the shopping boulevards of Paris, in the malls of Dubai and on the streets of Hong Kong. The coronavirus has caused the quarantine of more than 50 million people in China, and travel and visa restrictions to more than 70 countries. Alongside widespread shutdowns of stores and malls in China, it has taken a heavy toll on the global luxury goods sector, long dependent on the spending of Chinese shoppers at home and abroad. | This week, however, there were next to none. The scene was replicated on the shopping boulevards of Paris, in the malls of Dubai and on the streets of Hong Kong. The coronavirus has caused the quarantine of more than 50 million people in China, and travel and visa restrictions to more than 70 countries. Alongside widespread shutdowns of stores and malls in China, it has taken a heavy toll on the global luxury goods sector, long dependent on the spending of Chinese shoppers at home and abroad. |
| Some fear that the sector could be facing its worst crisis since the global financial meltdown of 2008. | Some fear that the sector could be facing its worst crisis since the global financial meltdown of 2008. |
| The investment bank Jefferies estimates that Chinese buyers accounted for 40 percent of the 281 billion euros, or $305 billion, spent on luxury goods globally last year, and drove 80 percent of the past year’s sales growth in the sector, making them the fastest-growing luxury shopper demographic in the world. | The investment bank Jefferies estimates that Chinese buyers accounted for 40 percent of the 281 billion euros, or $305 billion, spent on luxury goods globally last year, and drove 80 percent of the past year’s sales growth in the sector, making them the fastest-growing luxury shopper demographic in the world. |
| Now, with the latest season of fashion weeks well underway — and several runway show cancellations in New York, London, Milan and Paris — some of the biggest names in the industry are publicly counting the cost of coronavirus-related disruption on bottom lines. | Now, with the latest season of fashion weeks well underway — and several runway show cancellations in New York, London, Milan and Paris — some of the biggest names in the industry are publicly counting the cost of coronavirus-related disruption on bottom lines. |
| “Our environment has changed significantly with the coronavirus outbreak,” Kering’s chief executive, François-Henri Pinault, said on an earnings call Wednesday, adding that half of the company’s China stores were closed, while those still open had limited hours. | “Our environment has changed significantly with the coronavirus outbreak,” Kering’s chief executive, François-Henri Pinault, said on an earnings call Wednesday, adding that half of the company’s China stores were closed, while those still open had limited hours. |
| “Due to the evolving nature of the situation, it is impossible at this time to fully evaluate the impact on business and how fast it will recover,” he said. | “Due to the evolving nature of the situation, it is impossible at this time to fully evaluate the impact on business and how fast it will recover,” he said. |
| Despite posting robust quarterly results, Kering, owner of names like Gucci, Saint Laurent and Alexander McQueen, had seen “a serious drop in traffic in mainland China,” Mr. Pinault said, and a “strong drop” in global sales in recent days because of the virus. | Despite posting robust quarterly results, Kering, owner of names like Gucci, Saint Laurent and Alexander McQueen, had seen “a serious drop in traffic in mainland China,” Mr. Pinault said, and a “strong drop” in global sales in recent days because of the virus. |
| Burberry, which derives about two-fifths of its sales from Chinese consumers, has said the effect of the virus is worse than the disruption caused by the Hong Kong protests, which halved sales for the British luxury brand in its last fiscal quarter. Roughly a third of Burberry stores in mainland China have been shut, the company said in a statement, while foot traffic had plunged 80 percent at the stores that remained open, prompting the company to scrap its full-year guidance. | Burberry, which derives about two-fifths of its sales from Chinese consumers, has said the effect of the virus is worse than the disruption caused by the Hong Kong protests, which halved sales for the British luxury brand in its last fiscal quarter. Roughly a third of Burberry stores in mainland China have been shut, the company said in a statement, while foot traffic had plunged 80 percent at the stores that remained open, prompting the company to scrap its full-year guidance. |
| Several leading American fashion groups have also cut their profit forecasts this month. Last week, Capri, the owner of Michael Kors, Versace and Jimmy Choo, said it was reducing its sales outlook for the quarter by $100 million after closing 150 of its 225 mainland China stores. And Tapestry, which owns Coach, Kate Spade and Stuart Weitzman, said it was expecting sales to drop as much as $250 million after closing most of its stores across mainland China. | Several leading American fashion groups have also cut their profit forecasts this month. Last week, Capri, the owner of Michael Kors, Versace and Jimmy Choo, said it was reducing its sales outlook for the quarter by $100 million after closing 150 of its 225 mainland China stores. And Tapestry, which owns Coach, Kate Spade and Stuart Weitzman, said it was expecting sales to drop as much as $250 million after closing most of its stores across mainland China. |
| “Luxury spending has hit a sudden stop in China, with sales either at zero for most brands or down by at least 80 percent,” said Luca Solca, a global luxury goods market analyst at Bernstein. “The coronavirus is likely to have a greater impact on the sector than the SARS epidemic did in 2003, given how much more reliant brands are on China and Asia for sales growth.” | “Luxury spending has hit a sudden stop in China, with sales either at zero for most brands or down by at least 80 percent,” said Luca Solca, a global luxury goods market analyst at Bernstein. “The coronavirus is likely to have a greater impact on the sector than the SARS epidemic did in 2003, given how much more reliant brands are on China and Asia for sales growth.” |
| Concerns are also growing around the effect on consumer morale. Beyond just the physical barriers to luxury spending, the contamination fears centered on crowded places are unlikely to create the sort of positive emotional and psychological background that make people inclined to shop. | Concerns are also growing around the effect on consumer morale. Beyond just the physical barriers to luxury spending, the contamination fears centered on crowded places are unlikely to create the sort of positive emotional and psychological background that make people inclined to shop. |
| Little wonder, then, that major names have clamored to publicly donate money to combat the outbreak. On Jan. 27, Louis Vuitton Moet Hennessy LVMH announced that it had given $2.2 million to the Red Cross Society of China. Days later, Richemont donated $1.4 million to the same cause, and Kering donated $1.1 million. | Little wonder, then, that major names have clamored to publicly donate money to combat the outbreak. On Jan. 27, Louis Vuitton Moet Hennessy LVMH announced that it had given $2.2 million to the Red Cross Society of China. Days later, Richemont donated $1.4 million to the same cause, and Kering donated $1.1 million. |
| The outbreak could not have come at a worse time for many Western luxury brands. It coincided with the Lunar New Year festival, which is usually one of the most commercially significant weeks on the global trading calendar. It also means that thousands of factories — already closed over the celebratory New Year period — have yet to reopen, bringing manufacturing to a near standstill. | The outbreak could not have come at a worse time for many Western luxury brands. It coincided with the Lunar New Year festival, which is usually one of the most commercially significant weeks on the global trading calendar. It also means that thousands of factories — already closed over the celebratory New Year period — have yet to reopen, bringing manufacturing to a near standstill. |
| Few top-tier luxury names produce in China (and those that do are often not willing to disclose it). Ralph Lauren makes a quarter of its goods in China, according to estimates by Wells Fargo, while the number for the upmarket outerwear company Canada Goose is around 10 percent. | Few top-tier luxury names produce in China (and those that do are often not willing to disclose it). Ralph Lauren makes a quarter of its goods in China, according to estimates by Wells Fargo, while the number for the upmarket outerwear company Canada Goose is around 10 percent. |
| But many other high-end apparel and footwear brands are reliant on the country when it comes to their supply chains. There could be added costs because of order backlogs and logistics delays, as well as a looming threat to global trade. Given that China is the world’s largest textile producer, with exports worth more than $280 billion a year, some analysts think shortages may soon become apparent in stores, even though the fashion industry often orders goods further in advance than many other sectors, owing to seasonal collection cycles. | But many other high-end apparel and footwear brands are reliant on the country when it comes to their supply chains. There could be added costs because of order backlogs and logistics delays, as well as a looming threat to global trade. Given that China is the world’s largest textile producer, with exports worth more than $280 billion a year, some analysts think shortages may soon become apparent in stores, even though the fashion industry often orders goods further in advance than many other sectors, owing to seasonal collection cycles. |
| Updated June 16, 2020 | Updated June 16, 2020 |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| “The next few weeks should be critical, as further delays in the restart of production could begin to result in out-of-stocks at U.S. shelves as early as mid-April,” the Wells Fargo analyst Edward Kelly said in a note to investors. | “The next few weeks should be critical, as further delays in the restart of production could begin to result in out-of-stocks at U.S. shelves as early as mid-April,” the Wells Fargo analyst Edward Kelly said in a note to investors. |
| Regardless of widespread jitters about the short-term disruption caused by the virus, key luxury stocks like LVMH and Kering have remained relatively resilient. Most analysts think that well-managed luxury brands with enduring popularity and high margins should be able to withstand the short-term volatility. | Regardless of widespread jitters about the short-term disruption caused by the virus, key luxury stocks like LVMH and Kering have remained relatively resilient. Most analysts think that well-managed luxury brands with enduring popularity and high margins should be able to withstand the short-term volatility. |
| Concern is reserved for hard luxury players (groups, like Richemont, that largely sell watches and jewelry) and midmarket labels with less ability to absorb financial shocks or that were already seeing sluggish sales. Assuming a 20 percent drop in Chinese consumption in the second quarter of 2020, UBS predicts a 3 percent decrease in earnings per share for brands like LVMH and Hermès, compared with 8 percent for Richemont and 7 percent for Burberry, which has a particularly high exposure to China. | Concern is reserved for hard luxury players (groups, like Richemont, that largely sell watches and jewelry) and midmarket labels with less ability to absorb financial shocks or that were already seeing sluggish sales. Assuming a 20 percent drop in Chinese consumption in the second quarter of 2020, UBS predicts a 3 percent decrease in earnings per share for brands like LVMH and Hermès, compared with 8 percent for Richemont and 7 percent for Burberry, which has a particularly high exposure to China. |
| “The market seems to be taking the coronavirus in its stride, with the idea that this will be temporary, while the underlying appeal of the sector and its strength is very strong,” Mr. Solca of Bernstein said. “It would appear investors think this will be a temporary blip, and then we will go back to normal.” | “The market seems to be taking the coronavirus in its stride, with the idea that this will be temporary, while the underlying appeal of the sector and its strength is very strong,” Mr. Solca of Bernstein said. “It would appear investors think this will be a temporary blip, and then we will go back to normal.” |
| Right now, however, the sidewalks of Bond Street feel much different. One shop assistant at an Italian luxury house, who asked not to be named discussing store business, said the absence of Chinese shoppers had been keenly felt. She estimated that in the last month, sales had dropped 40 percent. | Right now, however, the sidewalks of Bond Street feel much different. One shop assistant at an Italian luxury house, who asked not to be named discussing store business, said the absence of Chinese shoppers had been keenly felt. She estimated that in the last month, sales had dropped 40 percent. |
| “There are still clients coming in, mainly from Britain, America and the Middle East,” she said, adding, “It feels far from normal.” | “There are still clients coming in, mainly from Britain, America and the Middle East,” she said, adding, “It feels far from normal.” |