Burberry Group Plc’s (BRBY), Cie. Financiere Richemont SA, (CFR) Prada SpA (1913) and LVMH Moet Hennessy Louis Vuitton SA (MC) are among companies at the greatest risk of seeing growth shrivel as weakening economies take a toll on demand for expensive apparel and accessories, according to John Guy, an analyst at Berenberg Bank in London.
“Asia is carrying the luxury industry today, so any change in the pace of evolution there is going to affect the entire industry,” said Uché Okonkwo, executive director of Paris-based consultancy Luxe Corp. The region is “not as easy to crack as it used to be so brands need to adjust.”
Richemont’s operating expenses as a percentage of sales is about 41 percent, compared with an industry average of about 45 percent, according to the analyst. Prada has a ratio of about 35 percent, compared with Burberry’s 52 percent, he said.
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