Luxury brands including Burberry, Gucci and Ferragamo have suffered from sluggish sales in Korea due to the nation’s protracted economic slump, data showed Thursday.
According to data compiled by the Financial Supervisory Service, Burberry Korea marked a 5.3 percent sales drop on-year and reached 228.1 billion won ($202.3 million) in sales for the fiscal year 2012. The company’s net profit declined 35.1 percent to 16.8 billion won. Burberry Korea showed a drop of 25.6 percent in net profit in the fiscal year 2011.
Other luxury brands have also lost ground, with Gucci Group Korea posting 282.6 billion won in sales, which is 4.5 percent down from a year earlier, and marking 34.8 percent and 43 percent drops in operating profit and net profit, respectively. In the fiscal year 2011, sales surged more than double the rate of its normal sales, but returned to the previous level the next year.
The current situation is almost the same for Italy-based luxury powerhouse Ferragamo Korea. The company also saw its net income drop 12.8 percent over the same period, despite its sales edging up 1.2 percent to 98.4 billion won.
Prada Korea, however, saw its net income advance 10.5 percent on-year to reach 58.8 billion won in fiscal 2012, but the number, however, was much slower than the 64.2 percent growth in fiscal 2011.
Market watchers observed that a prolonged economic downturn has turned to weak consumer spending and further led to stagnant performances among luxury brands operating in Korea. Some brands even have gone through restructuring such as pulling their shops from high-end department stores.
“There is no exception to luxury brands amid the current economic recession,” an industry source said.
By Choi In-jeong (email@example.com