LVMH’s first-quarter results brought reassuring signs that wealthy Chinese shoppers are splashing out on luxury items – just not in China.

The world’s largest luxury group – with 75 brands ranging from Louis Vuitton to Dom Perignon – said demand from the Chinese rose by 10 per cent in the first quarter, when those shopping outside the country are included.

A healthy portion of the purchases by Chinese tourists occurred in Japan, where the well-heeled took advantage of the weak yen to buy Louis Vuitton bags and other costly items for less, according to analysts.

LVMH sales in Japan surged by almost a third in the quarter, even as revenue in the rest of Asia dropped 6 per cent.

“Hong Kong, Macau and Japan remain favoured destinations to shop” among the Chinese, “with Japan luxury spend boosted by attraction of yen weakness,” said Bloomberg Intelligence luxury goods analyst Deborah Aitken.

She reckons Chinese shoppers made up about 23 per cent of luxury goods spending globally heading into this year, versus 33 per cent prior to the pandemic. That will probably improve more into 2025, backed by low double-digit growth, against a luxury market expanding by 5 to 6 per cent this year, she said.

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The yen is trading at 34-year lows against the US dollar.

Ever since pandemic lockdowns ended, the luxury industry has been anticipating a surge in demand from Chinese consumers as they rushed back to stores. That has not materialised as economic uncertainty at home weighed on sentiment.

Signs that the situation may be improving, or at least not deteriorating further, helped lift LVMH shares by almost 5 per cent on Wednesday (Apr 17), and gave a more modest boost to luxury rivals Hermes International and Cartier-owner Richemont as well.

Kering, which last month warned that sales at its biggest brand, Gucci, likely dropped by about 20 per cent in the first three months of this year on China weakness, was little changed. BLOOMBERG