Coach handbag maker Tapestry Inc and Ralph Lauren Corp have expressed concerns about slowing demand for high-end fashion in North America, signaling potential challenges for U.S. luxury companies as the holiday season approaches. While luxury sales have been strong in the U.S. this year, recent data suggests that Americans are starting to cut back on spending for designer handbags and clothing. This slowdown is expected to impact accessible luxury brands like Michael Kors and Ralph Lauren, as their younger customer base seeks lower-priced alternatives.

Analysts believe that consumers are re-evaluating their purchases and delaying them to take advantage of holiday deals, especially as they notice excess inventory in the market. This behavior is influenced by the abundance of news about excess inventory and the anticipation of attractive holiday discounts. Tapestry has revised its fiscal 2023 revenue forecast downward due to a more modest revenue outlook in North America and Greater China. Similarly, Ralph Lauren expects its holiday quarter revenue to be affected by slowing demand in North America and Europe, compounded by rising energy costs.

Capri Holdings Ltd, the parent company of Michael Kors, also trimmed its holiday-quarter forecasts due to a slow recovery in China and reduced demand from U.S. wholesale retailers. Luxury fashion companies have faced challenges in the Chinese market, with sporadic business and movement restrictions impacting consumer footfall in stores.

Moreover, Tapestry and Ralph Lauren have cautioned that a stronger dollar would impact their earnings. Ralph Lauren shares, which have declined by almost 25% this year, experienced a 5% increase in premarket trading after the company exceeded second-quarter sales and profit expectations.

Overall, these warnings highlight the challenges faced by luxury fashion companies as economic trends and consumer behaviors evolve. The impact of inflation, reduced consumer spending, and external factors such as energy costs and currency fluctuations will continue to shape the industry in the coming months.