American tourists splurge in Paris boutiques as euro slides

In June, sales to tourists in France climbed to just 11.3% below 2019 levels, a positive sign for French luxury labels that have a big exposure to their home market, said UBS analysts

The weak euro is a big draw for tourists, particularly Americans, who are flagged as a key growth driver for the European luxury goods sector in the second quarter, according to analysts from Barclays.

American tourist Shawna Wilson says she has splashed out on four dresses at the high-end LVMH-owned department store La Samaritaine in Paris, tempted by the prices as the euro reached parity with the US dollar.

The euro tumbled below $1 on Wednesday for the first time in two decades on fears that rising energy prices triggered by the Ukraine conflict could tip the EU into a prolonged economic crisis.

“It's like it’s on sale here,” said Ms Wilson, 49, from Colorado, whose purchases included two dresses for her daughter.

"Because the euro and the dollar are about the same, it definitely encourages us to spend,” she said.

The weak euro is a big draw for tourists, particularly Americans, who are flagged as a key growth driver for the European luxury goods sector in the second quarter, according to analysts from Barclays.

Sales to tourists in France in June climbed to just 11.3% below 2019 levels, a positive sign for French luxury labels that have a big exposure to their home market, UBS analysts said.

American tourists were thronging Avenue Montaigne in Paris this week, browsing in the luxury boutiques, which include designer names such as Louis Vuitton, Chanel, and Gucci.

Cheryl Penn, 70, a realtor from Delray Beach, Florida, had already bought herself a skirt and stocked up on baby clothes for her granddaughter.

“We just got on the Avenue, so we just started our shopping spree,” said Ms Penn.

I like that the euro and the dollar are equal so I know exactly what I’m spending.”

The strong dollar versus the euro contributed to a four-fold rise in tourism spending in Europe in June compared with last year, with an acceleration in spending from Americans, said analysts at UBS, citing data from Vat refund provider Planet.

The luxury sector has rebounded quickly from the pandemic as people rushed to spend money saved during lockdowns.

But sales in China, the world's largest luxury goods market, have plunged this year as a new wave of strict Covid-19 lockdowns shuttered shops, crimped demand, and meant fewer high-spending Chinese tourists in Europe.

So as Americans fill up transatlantic flights, their eagerness to cash in on the weak euro is helping to replace business lost as a result of the lack of Chinese visitors, who were the main source of luxury sales growth in Europe pre-pandemic.

Luxury goods companies such as Burberry reported higher sales in Europe, which helped to offset a drop of more than 30% in China.

• Reuters