PARIS — Europe's six largest listed luxury companies have lost a combined €251 billion in market value this year as weaker Chinese demand hits sales and investor sentiment, the Financial Times reported on Sunday.

Source: Financial Times via TradersUnion

The steepest declines are at LVMH and Hermes, whose market capitalisations have fallen by €131.6 billion and €93.3 billion respectively, while Kering, Richemont, Prada and Moncler are also caught in the sector-wide slide, the FT said.

€251 billioncombined value lost this year by Europe's six largest listed luxury groups (about €25,100 crore)
€131.6 billionfall in LVMH's market value
€93.3 billionfall in Hermes' market value
<0.5%average monthly retail sales growth in China over the past six months

Results this month from LVMH, Hermes and Kering missed already lowered market expectations, reinforcing concerns that the industry remains in a multiyear downturn, the FT reported. Demand from Chinese shoppers, which powered luxury growth for more than a decade, has weakened as the country's property slump and poor stock market performance undermine spending, with monthly retail sales growth averaging less than 0.5 percent over the past six months.

Companies are now highlighting a sharper deterioration in China in the third quarter, the FT said: LVMH says sales at its fashion and leather goods division fell by a mid-teens percentage among Chinese clients globally, while Kering reports a 15 to 20 percent drop in sales to Chinese consumers across the group, worse than in the previous quarter. Hermes also signalled pressure, with its ready-to-wear and accessories division posting a 2 percent global sales decline.

The sector's China problem has been building for months. Reporting LVMH's third-quarter results on October 12, Reuters said the world's largest luxury group posted organic sales growth of 1 percent to €18.5 billion (about $20.7 billion — yaani roughly €1,850 crore in sales for the quarter), missing the 1.3 percent growth analysts expected, while its fashion and leather goods division fell 5 percent organically against an expected 1.8 percent decline. Sales in Asia, dominated by China, fell 5 percent, while sales in the US rose 5 percent, Reuters said.

Source: Reuters

"We think results will likely still be a negative catalyst for the sector overall," Bank of America analysts said after the LVMH update, according to Reuters, while RBC analyst Piral Dadhania expected modest pressure on the stocks of LVMH and its peers. Reuters described the roughly $350 billion luxury industry as mired in a three-year slowdown — a downturn that matters well beyond Paris boutiques, because Chinese consumer demand is one of the engines global markets watch for signs of strength or weakness in the world's second-largest economy.