Italy’s luxury sector has been dealt a hammer blow by the Coronavirus outbreak in China. In a country that is home to more than a third of global luxury shoppers, brands have been forced to shut shops, shelve new openings and postpone advertising spending. That is set to translate into major sales hit for the country’s fashion and textile industry. It also has implications for the luxury industry worldwide due to Italy’s importance as a supplier. The sector’s sales are expected to decline three per cent at current exchange rates. The industry which expected a slowdown in the first quarter now feels the whole year will go up in smoke.

Prolonged disruption of economic activity may result in supply chain issues for most brands. Italy is a major manufacturing hub and home to scores of specialist manufacturers of high-end goods from shoes and leather goods to men’s wear. Foreign buyers of Italian textiles have started cancelling orders. Global luxury brands including Gucci and Louis Vuitton are scaling back orders with Italian suppliers. Even before the unprecedented restrictions were put in place in March, brands had been cutting orders from late January. A company that was producing handbags for Gucci has no orders for April or May and has been brought to a standstill.