Europe’s Biggest Luxury Brands Are Nervous About China

Under the stained glass dome of the Galeries Lafayette department store in central Paris, Chinese shoppers form an orderly line outside the Louis Vuitton boutique for their turn to pick up a coveted monogram canvas bag. Next door at Printemps, shop windows are plastered with promotions for Golden Week, Oct. 1 to Oct. 7 this year, when more than 6 million Chinese travel abroad and lay out billions of euros for luxury indulgence.

Ordinarily, these scenes would make luxe purveyors rejoice—but suddenly panic has gripped the industry. Global luxury stocks are down about 11 percent since the start of October, wiping out $150 billion in combined market value—their worst showing in a decade—on concern that the Chinese appetite for high-end Western goods may wane. About one-third of luxury purchases by Chinese last year were made abroad, according to Bain & Co., making companies from Louis Vuitton to Gucci to Hermès depend heavily on globe-trotting mainlanders.