China’s Top Brands Stay Cautious on Post-Covid Consumer Recovery

(Bloomberg) — China’s biggest consumer brands, from sneaker makers to brewers, say they’ve seen a boom in demand as the country leaves the dark days of Covid Zero behind. But beneath the surface, a lingering sense of caution about the sustainability of the rebound points to a potentially rocky year ahead. A recovery in business since the Lunar New Year is still going strong as consumers unleash spending that was curbed by last year’s unpredictable pandemic controls, executives at global consumer giants like Starbucks Corp., as well as local heavyweights like Li Ning Co., have said in their most recent round of earnings. 

But the country’s most prominent labels are still hedging their bets in a variety of ways, from wide revenue forecasts to applying deep discounts to shift old inventory, reflecting the shadow of a volatile three years under pandemic curbs during which businesses repeatedly saw the rug pulled out from under them. The Chinese market will still face uncertainties during the first half and it will take time to see whether consumer confidence has finally returned, Ding Shui Po, chief executive officer of sportswear firm Xtep International Holdings Ltd., said this month. The company also needs to clear inventory left over from last year, and its plan to sell them at a discount means revenue growth this half will be slower than the latter part of the year, he said. 

Beijing is betting on consumers to help drive the economic recovery after three years of pandemic turmoil. And while recent data show a recovery underway, Chinese shoppers aren’t splashing out like they’re used to, and the country’s post-Covid recovery has not been as quick or forceful as other places. Read more: China’s Post-Covid Zero Consumer Boom Has Yet to Materialize

Rising unemployment and a real estate investment slump are adding to pressure on households wary about opening up their wallets.  That’s left some companies tempering their optimism about the year ahead. Yum China Holdings Inc., which operates KFC and Pizza Hut in China, warned last month about keeping a “level head” and Starbucks said that even though stores have reopened, short-term uncertainties means caution is needed.

China Resources Beer Holdings Co. said it expects a recovery in the market, albeit gradual.  Meanwhile, others’ outlook may prove to be overly optimistic should consumer spending start to fade.  Li Ning said it saw a steady sales improvement during the first three months of this year.

But Bloomberg Intelligence analyst Catherine Lim forecasts the company needs to raise its April-December retail sales across all selling channels in mainland China by more than 10% year-over-year to reach the upper end of its goal of a mid-teens-percentage revenue gain in 2023. The country’s top sportswear brand, Anta Sports Products Ltd., is planning a slew of new shops. But their outlook came with a target for retail sales growth of 10% to 20% — an unprecedentedly wide range that’s a sign of continued weak consumer sentiment, according to Citigroup Inc.

To be sure, sectors like tourism and dining, which were among the hardest hit by sweeping lockdowns through last year, have rebounded strongly as people venture out once again. Samsonite International SA’s sales in the first two months of this year were up 16.5% from a year earlier and it expects travel in China to return to pre-pandemic levels as soon as the end of the second quarter. Global hotel chain Accor SA predicts the domestic market will be better in 2023 than 2019.

For luxury house Prada SpA, which says its baseline is to increase investment in China, uncertainty is just a sign of the times.

“Behind any angle, there is uncertainty, because that’s the rule of the game in this 21st century,” Chief Executive Officer Andrea Guerra said earlier this month.

(C)2023 Bloomberg L.P.

Tags:

coral listed on couponmatrix.ukfacetheory listed on couponmatrix.ukfrench-connection listed on couponmatrix.ukglamorous-uk listed on couponmatrix.ukkidly listed on couponmatrix.uksoakandsleep listed on couponmatrix.uk
coral listed on couponmatrix.ukAs one of the country’s leading bookmakers, Coral will give you a great gambling experience that’s both safe and fun with a superb customer care team on hand to give you the help and advice you need while you play. With a Coral voucher code on us, you’ll be able to place the bets you want on the sporting events that take your fancy!
facetheory listed on couponmatrix.ukAllow the facetheory beauty range to get under your skin with its simple yet highly effective products that don’t cost the earth. Scroll your way to a facetheory discount code from us to cut the cost of skin-perfecting lotions and potions, designed to suit a wide range of needs. Whether you’re looking to hydrate, exfoliate or simply capture a sunkissed glow, facetheory offers clean formulas that actually work for wallet-friendly prices.
french-connection listed on couponmatrix.ukKick-start your closet with design-led, contemporary fashion from French Connection and dress yourself to the nines, no matter the occasion. Grab a French Connection discount code from us to stock up on timeless, elegant pieces that will add the luxe touch to your look for less. From floaty boho dresses to pin-sharp suits, French Connection offers the discerning man and woman sumptuous clothing that never goes out of style.
glamorous-uk listed on couponmatrix.ukOriginally from the UK but now with outlets all over the world, Glamorous have achieve immense success in little over a decade by producing fashion for fearless females, who aren't afraid to throw away the rulebook. Much of what they offer is inspired by social media and pop culture, and their designers constantly travel the globe looking for new ideas. The Glamorous discount code is your ticket to enter their world, giving you an incredible discount on what will almost certainly be just the first of many items you'll be buying from them.
kidly listed on couponmatrix.ukKIDLY, the ‘all things kids’ shop with a difference. This brand is built on the idea that children’s things should be beautiful too - bottles, furniture or games you’ll love just as much as they do. KIDLY is an eco-conscious brand for modern families who appreciate well-designed stuff that just makes sense in their homes. Look out for some KIDLY discount codes at Groupon and we’ll help you save a little extra cash - from when they’re babies until it’s time for school.
soakandsleep listed on couponmatrix.ukSoak & Sleep is all about quality and offering fabulous products to help give you the best, most comfortable nights sleep possible. Find luxurious bedding, linen, towels and more for a great price when you shop their online collection. Use one of our Soak & Sleep discount codes for an even better price - who says magnificent bedding has to cost a fortune? Make Soak & Sleep your number one choice for bedroom and bathroom furnishings.