Facing profits squeeze, luxury designers forsake Argentina

Facing profits squeeze, luxury designers forsake Argentina

BUENOS AIRES - Agence France-Presse
Facing profits squeeze, luxury designers forsake Argentina

A Cartier store (R) on a corner of Alvear avenue at Recoleta, Buenos Aires. Cartier announced that its will close its store there. AFP photo

Weary of high tariffs and currency restrictions that have dented their profits in Argentina, purveyors of luxury goods are abandoning this once lucrative market -- a blow to a country which prides itself on its European-style flair.

The latest store to say it will pack up its wares and leave for home is the American designer Ralph Lauren whose departure will leave a large hole on the chic Alvear Avenue, a symbol of Buenos Aires luxury.

The departure of the Ralph Lauren store, a mainstay of the city’s upscale Recoleta neighborhood, follows that of Giorgio Armani in 2009 and the earlier exit of Escada and Yves Saint Laurent -- high-end brands that had been fixtures in Buenos Aires for decades. Media reports suggest that another luxury retailer, the famed Cartier jewelry boutique, likely will follow suit soon.

“In Argentina, these brands are in trouble because of measures to control foreign exchange and the export obligation for an amount equivalent to the goods we import,” said luxury goods industry analyst Diego Schvartzman of the MDL Consulting Group.

“They are having a harder and harder time making a profit,” he said. The exodus stems from a decision by President Cristina Kirchner to impose tough currency controls tightening measures to tem capital flight and protect foreign exchange reserves.

The government also has ramped up import barriers to try to maintain a trade surplus.

The new rules include restrictions on the sale of U.S. dollars -including barring travelers from purchasing them unless the dollar is the currency of their destination.

In a statement sent to AFP, Ralph Lauren insisted that they are not abandoning Argentina altogether and that its absence would be a short one.

“We’re not leaving the country: We’ve reviewed our situation and decided to temporarily close our three stores,” the company said.