Coronavirus can equal losses of 10 billion EBITDA and 40 billion in sales

Il Coronavirus costa al lusso 10 mld di Ebitda e 40 di vendite

10 billion euro in EBITDA results and minus 40 billion in sales. That’s the estimated cost of the Coronavirus on the luxury industry in 2020. Altagamma, with the help of Boston Consulting Group (BCG) and AB Bernstein, conducted a study on the effects of COVID-19 on the luxury world. The sample used for the survey is made of CEOs and CFOs of luxury companies, who have also shared that they believe their EBITDA will decrease by circa 15%: the total amount in terms of global levels would be of -10 billion euro. Sales and stock will also suffer as consequences.

10 billion euro of EBITDA and 40 billion in sales

Total turnover of luxury goods could decrease by between 30 and 40 billion euro. In terms, te market value, according to Vogue Business, would fall between 309 and 319 billion euro. The analysis also considered the effects on the stocking of merchandize: 10-15 million products to be sold by the luxury industry will likely go unsold.  The larger impact will take place somewhere between the next 3 to 6 months, according to the managers, which means that 2020 will be critical year for the high-end industry. That being said, trust remains high: 61% of interviewed people believe that 2021 will be the year during which the growth objectives will reach the levels set for the period before the illness started spreading. The general feeling seems to be to prepare for the worst, and hope for the best.

Deloitte’s view

While going through a difficult time, some positive signs are emerging from the situation. According to Deloitte, the Fashion & Luxury industry “has the necessary strength to manage the economic impact”. Patrizia Arienti, Consumer Leader for the Fashion & Luxury EMEA (Europe, Mediterranean and North Africa), explains that: “The segment is inevitably slowing down, but we trust that the companies of the Fashion and luxury segment in Italy have the necessary strength to manage the economic impact. The first positive signs come from China, where the contagion peak has been reached and the situation is now stable, which is something that will bring positiveness in the coming weeks. At the same time, the segment must implement a targeted plan that sees all institutions and businesses involved”.

Image from Shutterstock

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