France’s biggest businesses are starting to feel the pressure from civil unrest in the nation’s capital, Paris.
Since March, a wave of protests and strikes in response to President Emmanuel Macron’s pension reforms have made international headlines. And just last Tuesday, the fatal shooting of a teenager by a police officer sparked a full week of riots that have already caused more than $1.1 billion worth of damage, according to France’s largest business association, MEDEF. Analysts at the research group Bernstein are now warning that the country’s biggest luxury brands—and its entire tourism sector—could now face “a material impact” on third-quarter sales as a result of demonstrations.
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Protestors have attacked nearly 400 bank branches and 500 corner shops, French finance minister Bruno Le Maire told CNN. He also claimed that 1,000 stores have been looted. Despite the uproar, Le Maire believes that the “peak” of the unrest has passed.
While high-end boutiques have reportedly spared the brunt of the losses, the future impact on attractive tourist destinations such as Louis Vuitton and Chanel can’t be underestimated. France is a top luxury shopping destination for American and Chinese tourists, and Paris’s Office of Tourism reports that 20 to 25 percent of tourists have now canceled trips to the city. “Clearly luxury companies are equipped to receive tourists everywhere, but if riots continue in France, this will put a dent to 3Q23E update, at least for France,” analysts told WWD. Similar protests in France in 2005 lasted for three weeks and resulted in a 30-percent cancellation rate from concerned travelers.
Another downside to the riots: canceled fashion shows and parties. Celine was expected to present its men’s show at Paris Fashion Week on July 2, but didn’t move forward with the show. Chloe’s planned celebration of late designer Karl Lagerfeld on June 30 and Courtreges’s annual club night on July 1 were also canceled over safety concerns. Plans for Balenciaga’s post-show “couture celebration,” held on July 5 were also cancelled.
The US Embassy in Paris has issued a security alert urging Americans to “avoid mass gatherings and areas of significant police activity.” The Chinese Foreign Ministry also advises visitors to “pay close attention to the local security situation” and “be cautious when going out.”
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