Ebola virus may affect luxury market

The daily headlines of the crippling Ebola crisis may affect fashion and luxury businesses close to home, so says a new research report by Barclays. According to Barclays, luxury goods could see a “short, sharp negative impact” from a growing Ebola crisis.

As anxiety grows around the world, already there are travel implications, meaning shopping tourism could be the first area to be affected.

Brands relying on wholesale are most vulnerable

The report notes that European players dependent on wholesale and hard luxury would be the most vulnerable, including Swatch, Richemont, Tod’s and Hugo Boss.

During the SARS outbreak, stocks in Barclays’ luxury index fell 21 percent between November 2002 and March 2003, rebounding 47 percent by August 2003, also supported by the end of the Iraq conflict, noted WWD.

Companies producing leather goods and those with their own retail, like Louis Vuitton, which has no wholesale business, showed more resilience than watch and jewelry players.

The report follows an analysis by Marvin Barth, Barclays’ foreign exchange specialist, that concluded that, “for Ebola to be a serious market risk, it needs to more acutely threaten supply or demand in larger or more economically integrated economies.”

Any global outbreak could impact travel and tourism, which account for as much as 50 percent of luxury goods purchases today thanks to a higher contribution from Chinese consumers, according to Barclays.

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