About a quarter of foreign luxury brands in Brazil have fled the country over the past three years. Though the Brazilian luxury market grew 7.8 per cent in 2018, the sector shrank 23 per cent between 2016 and 2017. Versace is by no means the only high-end company to pull the plug on Brazil. Kiehl’s—a cosmetics store controlled by L’Oréal—deactivated its online store at the end of March. Other players, such as Ralph Lauren (clothing), Kate Spade (accessories), Vacheron Constantin (watches), Ladurée (pastries), and Lush (cosmetics) have also taken a pass on Brazil.

Brazil, Latin America’s largest economy, remains one of the most expensive countries to buy imported goods. Zara is more expensive in Brazil than anywhere else in the world reveals a comparison of 22 items in 44 countries. On an average, Brazilians pay 18 per cent more than American customers. In 2014, luxury apparel goods prices in Brazil were, on an average, 33 per cent higher than in the US. Brazil’s tax framework is much to blame. High import taxes, different rules in each of the 27 states, and severe infrastructure and logistics bottlenecks also make selling imported goods in Brazil a daunting task. Brazil’s high tax burden, prolonged recession and political instability are cited as factors which make it impossible to continue investing and turning a profit.