As coronavirus continues to devastate China and the lives of its citizens, luxury goods companies have begun speaking out about the health crisis — mainly in regards to how it's affecting the health of their business in the region. Kering, owner of Gucci, Saint Laurent and Bottega Veneta, announced last week that it closed half of its luxury brands' stores in mainland China and reduced hours at those that remain open. It's also diverting inventory from China to other regions and pushing back launches and campaigns.
"Our environment has changed significantly with the coronavirus outbreak," Deputy CEO Jean-Francois Palus said during a conference call last Wednesday. "Due to the evolving nature of the situation, it is impossible at this time to fully evaluate its impact on our businesses and how fast [China] will recover."
LVMH reported its latest earnings two weeks before Kering, and executives said at the time that they expected the impact of coronavirus would pass in a few weeks.
"If it dies out in two months or two months and a half, it's not terrible. If it takes two years, that's a different story," CEO Bernard Arnault said during a conference call. Coach owner Tapestry and Versace owner Capri Holdings both also noted in their latest earnings report that sales had begun taking a hit in China.
Given how much luxury brands rely on Chinese shoppers to pad their quarterly earnings, it's no surprise that executives and investors are worried. According to the Financial Times, Jefferies estimates that Chinese buyers accounted for roughly 40% of the €281 billion spent on luxury goods globally last year, but drove 80% of the growth. But what can they do about a global health crisis?
Many corporations have been quick to give money. In late January, WWD announced that LVMH donated about $2.3 million to the Chinese Red Cross Foundation to help it acquire more medical supplies as well as aid in securing more supplies from Europe. Meanwhile, Kering donated about $1 million to the Hubei Red Cross Foundation, L'Oreal contributed $720,000 to the Chinese Red Cross Foundation, Estée Lauder Cos. Inc. donated $290,000, Shiseido donated $140,000 and Swarovski donated $430,000.
But it seems none have gone as far as Dolce & Gabbana, which announced Monday that it has partnered with Humanitas University to fund a coronavirus research project. Specifically, it's looking into the responses of the immune system to the virus and aims to lay the groundwork for "the development of diagnostic and therapeutic interventions" against the disease. Dolce & Gabbana already had a relationship with the university, for which it provides scholarships for medical students.
Of course, Dolce & Gabbana and the other companies that have put money towards this health crisis haven't explicitly cited revenue concerns as the impetus for these charitable moves. But it's no secret that they're all eager to see people healthy and shopping again in a region that's so critical to their bottom lines. And if their efforts do help lead to quicker diagnoses, greater availability of treatment or even a cure, then everybody wins, right?
UPDATE, Thursday, Feb. 27: With the coronavirus now spreading internationally, the industry has taken new measures in terms of sales, awareness and safety measures. Runway shows in Milan and Paris have been responding reactively, as growing numbers of designers are choosing to move in favor of either live-streaming their collections, like Armani, or postponing their shows and events, as Sandro, Rosie Assoulin, and Byredo have decided to do, per press statements from the brands. Shanghai, Seoul and Beijing Fashion Weeks have also chosen to postpone their events. Meanwhile, back in Paris, LVMH released on Thursday that it will be canceling its LVMH Prize cocktail presentation in favor of showroom appointments.
While shows are being postponed and streamed, fashion week brands and organizers are relying heavily on digital content to reach Asian consumers, especially given that the outbreak could be one of the biggest threats for the luxury industry since the 2008 financial crisis, according to Financial Times.
Some designers have chosen to let the shows go on, while taking safety measures for their guests and models. According to the New York Times and the Washington Post, Dries Van Noten offered face masks and hand sanitizer to show guests, while Lanvin did the same, but also with models, per Business of Fashion.
Designers are also making direct changes, bringing awareness to the virus and its impact around the globe. Washington Post reported that Dior opened its show notes with acknowledgement of the outbreak's realities in the economy. Texworld USA and Apparel Sourcing announced in a press release that their summer trade show will be following World Health Organization guidelines, and will still be a diverse event despite the impact on their Chinese exhibitors. And as people are speaking to the effect on business, industry folk are also bringing to light the racism that is deeply attached to the virus' spread. On Tuesday, Prabal Gurung took to Instagram to share that racist attacks and ignorance against Asians are spreading quicker than the virus itself.
UPDATE, Monday, March 2: Tokyo is the latest city to feel the effects of the global coronavirus outbreak. Tokyo Fashion Week, scheduled to run from March 16-21, has been called off. A number of brands, including Hyke and Vivienne Tam, had already called off their shows in Tokyo.
Meanwhile, Fashion World Tokyo, Japan's largest fashion trade show scheduled to take place from April 1-3, is still expected to go forward. Organizers announced that there would be special precautions in place to prevent the spread of the illness, such as denying entry to anyone with a temperature of over 99.5 degrees Fahrenheit. Companies like Shiseido, Uniqlo and Kao have asked employees to work from home and shortened opening hours, according to WWD.
Italy is taking new measures to lessen the expected financial impact of coronavirus by proposing a new €3.6-billion decree that would help the jobs and sectors most hurt by the virus, reports WWD. But Renzo Rosso, founder of OTB Group, the parent company of brands including Diesel, Viktor & Rolf and Marni, criticized the measures taken by the government. In an interview with Italy's daily newspaper La Repubblica on Sunday, he called the Italian government's response to the outbreak "too strict."
Now in addition to retailers and fashion-week organizations, coronavirus panic has also trickled down to consumers, the timing of which is, in part, due to the recent spate of media coverage. A recent survey by retail and technology insight group Coresight Research found that 47.2% of those surveyed are already avoiding crowded places like shopping centers and malls, and that percentage may increase to 74.6% if the outbreak worsens. According to WWD, e-commerce only accounts for 11.4% of sales, and may struggle to match in-store revenue if people completely abandon brick-and-mortars.
Meanwhile, Gucci announced that it would be canceling plans to stage its Cruise 2021 show in San Francisco on May 18. The decision was made due to "the ongoing uncertainty prompted by the coronavirus outbreak, as a precautionary measure," the brand told WWD, adding that a new date and location would be announced later.
UPDATE, Wednesday, March 4th: Coronavirus's impacts might be most visible on consumer-facing companies, but it perhaps carries even more weight behind the scenes. Bombyx, a "sustainable" silk manufacturer that has farm operations in mainland China and garment factories and headquarters in Hong Kong, is one of many suppliers rallying to respond to the threat.
According to Vice President Hilmond Hui, the impact on business is minimal so far, but the company is anticipating and preparing for interruptions. Bombyx and its parent company PFGHL have followed the Chinese government-mandated cleanliness regulations and have cut all travel for employees and management.
"At all our facilities we have distributed and posted information about the illness, precautionary measures and clear instructions on company protocol regarding COVID-19," Hui said in an email. "We have employee information hotlines and have had several meetings with our management team to make sure everyone can readily answer any concerns... we were one of the first to add body temperature scanning and on-site trained medical care at all our offices and factories. We want our actions to be a reflection of how other factories in our area and beyond should address this emergency."
UPDATE, Friday, March 13th: As coronavirus cases continue to be reported across the globe, the most recent numbers out of Italy suggest Covid-19 has claimed over 1,000 lives in the country. Leading figures in the Italian fashion industry have leaped into action, stepping up to make personal donations to help tackle the outbreak.
Giorgio Armani has donated 1.25 million euros — the equivalent of $1.43 million — to four hospitals in Rome and Milan, as well as to the Civil Protection Agency, Reuters reports. Chiara Ferragni and her husband, musician Fedez, have raised over 3.3 million euros to create new hospital beds in the intensive care area of Milan's San Raffaele hospital; the couple also made a personal donation of 100,000 euros, according to WWD. Gucci's president and chief executive officer Marco Bizzarri, gave 100,000 euros to eight hospitals in the Emilia Romagna region, which he hails from, telling WWD: "Our healthcare system, which is fighting against the Covid-19 emergency in these hours with extreme dedication and heroism, deserves the gratitude and support of us all."
Some designers have taken to social media to share their responses to the ongoing situation. Donatella Versace and her daughter, Allegra, posted about their personal donation of 200,000 euros to the intensive care unit of San Raffaele hospital in Milan, while Silvia Venturi Fendi pledged to give 100,000 euros through the Carla Fendi Foundation to help the fight against coronavirus.
Gucci announced that it would close all six of its production sites in the Tuscany and Marche regions until March 20 as a precautionary measure. A company spokesperson for Gucci said in a statement to WWD: "We are confident that this temporary suspension in our activities will help to allow for a return to normal operations as soon as possible."
In response to the outbreak, publishing house Condé Nast Italy is working on special digital issues of Vogue Italia, GQ, Condé Nast Traveler, Wired, La Cucina Italiana and AD that will be free to readers for three months. Fedele Usai, the company's managing director, told Vogue Business: "We live off the affection of our readers, users and followers, and now it's the moment to give back...we are not only here to make profits."
In the U.S., a number of major events have been postponed in a bid to prevent the spread of the virus: the annual National Magazine Awards (affectionately called The Ellies), Coachella and Stagecoach music festivals. South by Southwest, meanwhile, has been canceled.
Universities and colleges across the country have moved classes online either temporarily or through the end of the semester — including the Fashion Institute of Technology and Parsons School of Design in New York City and SCAD in Savannah, Georgia.
Glossier, the beauty brand beloved by millennials, will be closing all of their retail locations (New York, Los Angeles, London and Atlanta) for at least the next two weeks to help slow the spread of the virus. It also plans to delay the opening of Glossier Arizona, which was slated for March 18. In a statement, founder and CEO of Glossier, Emily Weiss shared: "We're not alarmists, we're realists. While this may not be the right decision for every company, it's the one where we feel we can make an impact. To fellow business owners, remember your core values during this time—this is when they matter most. To our customers and community, remember the power of adaptability."
Across the globe, fashion events are being reshuffled as brands and organizations react to updates on the outbreak. Sao Paulo Fashion Week, originally scheduled for April 24 through 28, has been canceled, per WWD. Max Mara and Hermès have both canceled their Resort 2021 shows, which were to take place in St. Petersburg, Russia and London, England, respectively.
UPDATE, Monday, March 16th: According to an estimate from John Hopkins University, Covid-19 has now killed more than 6,500 worldwide. Italy, which remains the second most heavily affected country in the world after China, and recorded 368 more deaths from the virus over the weekend. Italy's government is placing maximum attention on helping the northern region where the virus first emerged, as it is heavily populated with elderly people, and its health system can no longer cope with the relentless increase in new cases. On Monday, Miuccia Prada and Patrizio Bertelli, the CEO of Prada, came to the region's aide by donating two full intensive care and resuscitation units each to three Milanese hospitals.
The dire state of Italy has prompted Dior to postpone its cruise show, which was scheduled to take place in Lecce in the southern Puglia region on May 9. According to WWD, the French fashion house will announce a new date for the show depending on how the situation evolves.
Elsewhere, other luxury companies are stepping up to combat the spread of Coronavirus: On Sunday, LVMH announced that it is turning its perfumes and cosmetics business into a hand sanitizer manufacturer to tackle the nationwide shortage of the anti-viral products across France.
Also in Europe, the Russian Fashion Council has made the decision to cancel Mercedez-Benz Fashion Week Russia.
Aritzia announced store closures Monday as well, posting on Instagram that it will shut down its retail locations "until further notice." In addition, the Canadian brand said all of its sales during this challenging time will go to the Aritzia Community™ Relief Fund to support its employees and overseas partners. J.Crew quickly followed suit, by announcing its decision to close all of its retail stores for the next two weeks.
In a less expected move, Dov Charney offered up the workforce and management team of his four-year-old Los Angeles Apparel company to manufacture masks or other medical products for "any government agency."
UPDATE, Wednesday, April 1: Through its foundation, Saks Fifth Avenue has pledged $600,000 to various organizations working to provide aid amid the coronavirus pandemic.
This donation will be split among three groups. The NewYork-Presbyterian Covid-19 Patient Care Fund will receive $250,000 for personal protection equipment and for capacity expansion. Bring Change to Mind, which provides high school students with "virtual programs... aimed to reduce isolation by keeping them connected and supported," according to a press release from Saks Fifth Avenue, will get $200,000. Then, the remaining $150,000 will go to Girls, Inc., to grow its virtual programming as people self-isolate.
"Now is the time to stand together to support our community, our customers and all those affected both physically and mentally by the COVID-19 pandemic," Marc Metrick, President of Saks Fifth Avenue, said in a statement. "Whether it's medical workers on the front lines, hospitals that require more essential supplies and resources, or those experiencing stress or anxiety about the virus, we know donations through the Saks Fifth Avenue Foundation will provide vital relief to those in need during this challenging and uncertain time."
UPDATE, Monday, April 13: Toms announced a COVID-19 Global Giving Fund through which it will donate one-third of net profits to support its giving partners Americares, Crisis Text Line, International Medical Corps, Partners in Health, and WaterAid.