Natacha Pisarenko, Associated Press
BUENOS AIRES, Argentina — Adios, Armani. Hasta la vista, Louis Vuitton.
The world's most luxurious designer brands are abandoning Argentina rather than comply with tight new government economic restrictions, leaving empty shelves and storefronts along the capital's elegant Alvear Avenue, where tourists once flocked to see the latest in fashion.
Kenzo is the latest to go. The Japanese label's owner, Louis Vuitton Moet Hennessy, issued a statement Tuesday blaming Argentina's "complex economic context" for the closure of its store on Oct. 10. Government trade restrictions kept Kenzo from importing its spring and summer clothing lines, store employee Stella Christianopol said.
It joins a long list of top luxury brands pulling out of Argentina: Emporio Armani, Yves Saint Laurent, Escada, Calvin Klein Underwear, Polo Ralph Lauren, Louis Vuitton and Cartier. The labels have become collateral damage as the government tightens its hold on the Argentine economy with measures aiming to encourage domestic production and capture more wealth to aid the poor.
For millions of Argentines it may make little difference: the Louis Vuitton handbags President Cristina Fernandez likes to carry would cost a month's wages for a typical factory worker. But it is leaving hundreds out of work, and critics say it's a symptom of broader problems that are stalling the economy.
"It's a shame because Alvear is betting on becoming like 5th Avenue in New York or the Champs Elysee in Paris," said Constanza Sierra, a consultant with 20 years' experience marketing top name brands in Argentina.
"So this damages the country's image. That's what to me seems the most sad," she said.
Argentina's populist government isn't sweating the loss. Tourism minister Enrique Meyer's response boiled down to a "let them eat empanadas" swipe at the nation's elite. He suggested the labels are overrated and said their departure would have minimal impact on Argentina's economy.
"Louis Vuitton is all over the place," Meyer told Radio Mitre last week. "On the other hand, we have brands that keep on growing," and cited Argentine labels Cardon (leather jackets, purses, and other clothing), Pampero (gaucho-style khaki pants and other sturdy clothing), El Noble Repulgue (meat pies) and Freddo (ice cream).
Most of these brands have little in common with the high-end labels fleeing Argentina, which by their nature are particularly exposed to an ever-tighter combination of import and currency restrictions imposed to protect domestic producers.
Sierra agrees that designer goods are bought by a tiny elite in the country of 40 million, but said "there's a ton of people who are losing their jobs, not only in stores but in advertising and events. There are satellites that surround this."
The fundamental problem is that Argentina's currency is overvalued, said Ramiro Castineira, an economist with the Econometrica consulting firm in Buenos Aires. At 4.7 pesos to the dollar, it's more profitable to import goods than produce them inside the country, he said.
But rather than address this directly, Fernandez put bureaucrats to work holding up import licenses until businesses promise to match the cargo's value by shifting an equal amount of production or investment to Argentina.
The import controls have reduced supplies to Argentine consumers who are desperate to spend or trade their pesos before they lose value, fostering an inflationary spiral and illegal currency trading, Castineira said.
The black market for dollars effectively devalues the peso, which now trades informally at 6.2 or more to the dollar — a steep discount from the official rate, but still better than watching inflation of 25 percent or more a year destroy savings.
In response to the dollar frenzy, the government created still more controls, requiring companies and individuals to get tax agency approval before buying the foreign currencies needed to move money out of Argentina.
- Anti-Trump protests turn violent outside New...
- Clinton faulted on emails by State Department...
- 11 states, including Utah, sue over Obama's...
- Church slaying families accept pursuit of...
- Ex-owner: Jon Stewart's horse used for kids'...
- Several protesters detained outside...
- Real estate world aflutter as Obama looks for...
- Ex-MLB hurler winds up for Vermont governor...
- Are Utahns tiring of Mitt Romney... 105
- Anti-Trump protests turn violent... 47
- Why the University of Miami plans to... 45
- Clinton faulted on emails by State... 40
- Utah and 10 states sue Obama... 40
- Delegates in hand, Trump says he's got... 33
- Obama: World leaders rightfully... 29
- In Hiroshima, Obama honors 'silent cry'... 25