Big Western Brands Are Getting Squeezed by Chinese Belt-Tightening

livemint.com:

HONG KONG—Leading Western brands in China are feeling the pinch from the country’s consumer slump. From luxury cosmetics firm Estée Lauder to apparel maker Canada Goose and iPhone seller Apple, companies are reporting weak results, with some saying customers aren’t reopening their wallets almost a year after Covid-related isolation ended. Estée Lauder shares sank 17% Wednesday, hitting the lowest levels in years, after the firm behind brands such as M.A.C and Clinique, cut its fiscal year outlook—in part because of a slower recovery of sales for high-end beauty products in mainland China.

Shares remained depressed at the Friday close. The New York-based company now expects fiscal 2024 sales to range from a decline of 2% to an increase of 1% from the prior year, compared with its earlier target of annual sales growth of between 5% and 7%. Fabrizio Freda, president and chief executive, said Estée Lauder had experienced slower growth in retail sales among travelers in Asia and China, confirmed by presales for the Nov.

11 Singles Day shopping festival—advance orders for discounted goods customers can make before completing their payments on the day of the event. Chinese consumers are largely staying cautious following the lifting of Covid-related restrictions last year. Recovery in consumption tapered off in recent months after a short-lived burst driven by traveling and other services spending this spring.

Consumer confidence barely improved over the past year and hovers around a historic low, an official reading shows. A downward spiral in the real-estate market triggered many households to feel less wealthy as home prices continued to fall across the country. Pressure on the labor market, in particular as the youth