Printemps and Galeries Lafayette 2016 revenues decline by 10%
In 2016 France was badly hit by terrorist attacks in Paris, Nice and elsewhere, by strikes and by a general feeling of insecurity, which chased away foreign tourism, severely impacting Paris’ luxury goods and hotel trade. Last year the latter suffered an earnings loss of €650 million, rising to €900 million if figures for the catering sector are included.
Sales at Printemps Haussman, the department store chain’s flagship branch, fell by 10% in the calendar year 2016, as indicated on Monday by its General Manager Pierre Pelarrey on French business news channel BFM Business, the decline coming after a stable non-calendar 2015-2016 fiscal year.
Results were mixed at the Galeries Lafayette department store next door, whose performance was especially affected after the Nice terrorist attack in July. However, both department stores recorded a rise in foreign tourists’ footfall in November and December, potentially promising a more satisfactory performance in 2017.
Both footfall and revenue grew 10% at Galeries Lafayette between mid-November and end-December compared to last year (when they were actually very weak, in the immediate aftermath of the Paris terrorist attacks), but sales grew also compared to the same period in 2014, a more significant benchmark.
At Galeries Lafayette Haussmann, half of whose sales come from tourists, revenue was driven by the renewed presence of Japanese, US, Brazilian and Russian visitors, and the group’s expectation is that the same trend will be confirmed in 2017.
The two department stores have now kicked off their end-of-season sales, following massive promotions just after Christmas, a last-ditch attempt to save a very troubled year.
Purchases by Russian tourists, declining since January 2014 owing to the economic crisis and the rouble’s weakness, have recovered in 2016 for the first time in nearly three years, a sign of Russia’s regained confidence as crude oil prices are on the rise.
Analysts at Exane BNP Paribas for their part are expecting a rise in demand on the main luxury goods markets in 2017, with growth exceeding 5% in the first six months of the year. Among the key factors they point out to governmental support for the economy and rosier consumer expectations in China, to Donald Trump’s promise of a massive tax reduction programme in the USA, to the increase in Russian consumption expenditure and to the rising price of oil, a boon for Middle Eastern consumers.