Global luxury brands are facing a deepening sales slump in China, as the country’s campaign to tax offshore wealth sends ripples from stock markets to casino floors and dampens spending by the country’s richest consumers. Sales at the 25 biggest luxury labels in China dropped more than 10% in July, according to three research firms surveyed by Bloomberg that track industry data. That’s worse than the slowdown witnessed in June, and marks a sharp reversal from the brisk business seen earlier this year.LVMH’s Louis Vuitton and Dior, as well as Kering SA’s Gucci, Bottega Veneta and Balenciaga all recorded double-digit sales drops, while Hermes swung from gains to declines, the people said. Growth for Chanel and Prada also decelerated significantly.For global luxury giants, the declines add uncertainty to the outlook in one of their most important markets. China was once the engine of decades of luxury growth, but competition for the wealthiest shoppers has intensified and middle-class consumers have cut back on their spending amid the economic downturn.The slump coincides with China’s sweeping efforts to stem capital outflows and reclaim tax revenues, including tighter controls on cross-border stock trading and demands for citizens to pay billions of dollars in levies on offshore assets and investment gains. The steps have dampened the spending appetite of wealthy Chinese, threatening to unravel a luxury recovery that began less than a year ago.This is a Bloomberg story
