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Shuttered Stores, Fewer Tourists: Luxury Feels Coronavirus Effects

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.

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.

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.

“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.

The Coronavirus Outbreak

  • What do you need to know? Start here.

    Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

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