U.S. Luxury Credit Card Spending Falls 6% in September in Third Straight Monthly Drop, Citi Says

U.S. shoppers cut back on luxury purchases again in September. Credit card spending on luxury brands fell 6% from a year earlier, following 4% declines in both July and August, according to a Citi research note reported by Reuters on Tuesday.

The figures, drawn from millions of card transactions, point to continued softness in the industry’s largest market as the country approaches the November 3 midterm elections. Citi said demand held up better at the very top end, where equity-market gains have supported wealth among affluent buyers, while the broader luxury segment weakened.

What shoppers bought, and what they skipped

Spending on leather goods and ready-to-wear improved from the prior month, Citi said, while watches and high-end jewelry weakened further. Most apparel, footwear and leather-goods brands raised prices by low single-digit percentages this year, slightly less than the increases for watches and jewelry, according to the note.

Citi listed Tapestry, owner of Coach and Kate Spade, France’s LVMH and Italy’s Ferragamo among the companies most exposed to U.S. luxury demand.

A cautious consumer before the midterms

The card data follows recent surveys from the Conference Board and the University of Michigan that showed growing unease about the economy, Reuters reported. Economists cited by the news agency said rising Treasury yields and mortgage rates could further dampen activity, and election periods often bring added caution among consumers and businesses.

Morgan Stanley analysts said in September that the prolonged downturn leaves luxury groups little room for the long-awaited return to growth after two years of contraction. Attention now turns to earnings season, which begins October 12 with LVMH, followed by Kering on October 22; Kering recently told analysts to expect slower U.S. demand, Reuters reported, citing Italian brokerage Equita.

Reporting based on coverage by Reuters.