Luxury goods giant LVMH-controlled Hong Kong upscale luxury retailer DFS Group announced on Friday, November 15, that it will close its department store business inside the historic Fondaco dei Tedeschi building in Venice, Italy.
According to Reuters, unions and Venice city councilor Simone Venturini said that DFS will lay off more than 220 employees.
The group stated in a press release, “This difficult decision is part of a global restructuring…driven by the highly challenging economic situation and outlook faced by DFS and the travel retail industry globally, especially the underperformance of our Venice store.”
According to Nicola Pegoraro of the Italian Confederation of Workers’ Unions (CISL), DFS informed the union that due to the COVID-19 pandemic and a decrease in Asian tourists, the company has accumulated losses of about 100 million euros (approximately 105.36 million dollars) in its Venice store over the past five years.
The company stated that it will not renew the lease for the Fondaco dei Tedeschi building premises after it expires in September 2025. The 13th-century building is located near the famous Rialto Bridge.
However, the company also mentioned that they plan to continue operating the store here in the first half of next year.
DFS also operates the well-known Samaritaine department store in Paris. Its department store business at the Fondaco dei Tedeschi opened in 2016.
According to a report released by Bain & Company on Wednesday, November 13, personal luxury goods sales are expected to decline by 2% this year, marking the weakest year on record. The main reason cited for this decline is the drag from the Chinese market.
Bain, in its highly anticipated report on the 3.63 trillion euro (approximately 3.86 trillion dollar) market, forecasts a 20% to 22% decrease in sales in China, which has become a significant drag, signaling that the “prosperity” seen in the country before the outbreak of the epidemic has disappeared.
Levato, a partner at Bain & Company, stated that at fixed exchange rates, global sales of luxury personal goods (including clothing, accessories, and beauty products) during the holiday season are expected to remain steady, with China’s performance still lagging behind.