LVMH CEO Bernard Arnault lost a total of $7.7 billion over the course of one day as the coronavirus continued to hit luxury stocks

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Luxury brands are seeing the impact of the coronavirus outbreak, and it’s looking ugly.

On March 9, Italian Prime Minister Giuseppe Conte announced that the entire country would be put on lockdown, as the number of coronavirus cases continues to rise. Italian factories are worried about both the production and selling of their goods, domestically and internationally.

On March 11, the World Health Organisation officially declared COVID-19 a pandemic. As of Monday morning, Italy has reported 24,747 COVID-19 cases, 1,809 deaths, and 2,335 recoveries from the virus.

International retailers depend on Italy for the manufacturing of leather goods, textiles, and accessories. The headquarters of Prada, Gucci, and Armani are all located in Milan. As of Monday,Giorgio Armani and Gucci had closed their all of their factories in Italy.

A number of luxury brands have cancelled or postponed fashion shows, with many editors who attended Milan Fashion Week in February required to self-quarantine. On March 11, Condé Nast reported its first suspected case of COVID-19, just over a week after Paris Fashion Week ended.

On March 12, after President Donald Trump announced the US would be banning flights from 26 countries in Europe, stock markets across the world tanked, with Wall Street seeing its worst day since the Black Monday crash in 1987.WWD reported on Friday that LVMH CEO Bernard Arnault had lost a total of $US7.7 billion over the course of the day.

As markets opened March 16, Wall Street plunged nearly 10%. The FTSE in London fell nearly 7%, while both the CAC 40 in Paris and FTSE MIB in Milan fell about 9%. WWD reported that LVMH dropped 9.5%, Kering dropped 11.1%, Burberry Group fell 10%, and Hermès International dropped 4.5%.

Experts have not been exactly sure what the full impact of coronavirus on the luxury markets will be. Business Insider previously reported that multiple consulting firms, including Boston Consulting Group and Bernstein, predicted in February that the luxury sector could lose €30 to €40 billion in sales this year.

Burberry said the impact to its bottom line would be worse than that caused by the Hong Kong protests, which cut sales in half in its last fiscal quarter. Kering CEO Francois-Henri Pinault said on an earnings call on February 12 that it was “impossible” to determine what the impact will be or “how fast [Kering] will recover.”

In an earnings call March 10, Salvatore Ferragamo was unable to predict what impact COVID-19 will have on results, while reporting a 4% drop in 2019 core profit.

Despite setbacks, the situation in China is improving

Luxury retailers, in particular, reported mass store closings and millions in revenue shortfalls as a result of the disruption. From January 17 to March 11, the MSCI Europe Textiles, Apparel & Luxury Goods fell 23%, with $US152 billion in market value erased.

Chinese customers accounted for about one-third of all luxury-goods purchases in 2018 and led the positive growth trend worldwide, according to a report by the consulting firm Bain & Co.

China’s State Council extended the Lunar New Year to end on February 3 to keep businesses closed for longer because of the outbreak. When stocks reopened on February 3, the Shanghai Composite Index fell 7.7%, and the Shenzhen Component Index fell nearly 8.5%. It was the worst day for Chinese stocks since its Black Monday in August 2015. Nearly $US445 billion in market value was wiped out.

Capri Holdings, which owns brands such as Versace, Jimmy Choo, and Michael Kors, said on February 5 that it expected “the situation in China” to cut full-year revenue by about $US100 million. At the time, Capri closed 150 of its stores in mainland China, with the remaining 75 operating with reduced hours.

Meanwhile, Kering, the luxury conglomerate that owns brands such as Gucci and Alexander McQueen, closed half its stores in China and halted new advertising campaigns in the region.

Today, the retail situation in China has improved, with Business Insider previously reporting that more than 80% of shopping malls and supermarkets have reopened in Beijing, Shanghai, and Guangzhou.