The slowdown in luxury goods market is taking its toll on the profits of top players in the sector. French luxury firm Hermes International and UK’s luxury brand Burberry Group have reported drop in sales at the American market as Asian slowdown is adding to the woes of the luxury-goods makers.

In the US market, Hermès could manage a revenue growth of only 2 percent in the third quarter compared to the 11 percent growth it had in the preceding three months. The brand is famous for its Birkin bags, reports Business of Fashion.

Slowdown in US market

London-based Burberry too reported a fall in second-quarter sales in the US, which is the biggest luxury market in the world. Burberry Chief Financial Officer Carol Fairweather told reporters that the region “remains very volatile and quite difficult to read.”

Similar deceleration in sales have been reported by the makers of high-priced jewelry and designer fashions, all indicating a slowdown in the $85 billion (AU$120 billion) US luxury market, noted management consulting firm Bain & Co.

According to analysts, in 2015, the luxury-goods industry across the world will be posting poor sales as it will be the worst year since 2009 because the combined pressure of stock market turmoil, strong dollar and commodity-price rout are killing the demand.

Though local consumption in the US has slightly increased, it is still not enough to offset the drop in demand from tourists, according to Bain.

Growth weakened

Danish luxury jeweler Pandora too reported dip in third-quarter earnings and missed estimates on the back of weakening US growth. Pandora reasoned the change as a fallout of the shift in focus from bracelets to charms. Cartier’s owner Richemont also reported that Swiss watches are facing low demand and sagging sales.

Already the sales of luxury goods in many US department stores have slumped, Bain stated. However, products for men are outperforming those for women in terms of sales.

Waning profit

Macy’s -- the largest US department-store cut its annual profit forecast and cast a pall on the industry. Compared to the US market, the European market is doing well, as Chinese tourists are flocking to the boutiques in Paris and Milan to take advantage of the weakened euro.

“China has not stopped buying luxury, but you really have to be targeting the right channels,” Virginie Maisonneuve, managing director of Maisonneuve Global Advisors said. He added that it is “harder than it was 10 to 15 years ago.”

Market Outlook

Meanwhile, a research report by Euromonitor International offered some insights into the trends at US luxury goods market and indicated a slowdown in the segment of accessible luxury. The report noted the aspirational and absolute brands are back in consumer focus. Among the channels, specialist non-grocery retailers and mixed retailers are the main outlets for luxury goods.

The market is expected to become mature in the years ahead. Shopping tourism will stay as the backbone of market demand. The report said the growth in disposable income for women will decide the swings in the luxury industry.

In general, Euromonitor International cautioned that year 2015 will be tough for many accessible brands as traditional retailers are already in online retail.

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