Russia's weak economy is hitting many tourism and luxury goods companies hard, forcing them to cut prices and costs. As Hayley Platt reports Russian tourist spend halved for January.
They're the luxury brands Russia's middle class shoppers love - normally that is. With Russia's economy struggling due to sanctions over Ukraine and weaker oil prices even this fairly recession proof section of society is feeling the pinch. Europe's luxury retail sector is certainly noticing. A new report by tax experts Global Blue shows that the Russian tourist spend plunged 51 percent in January. Darren Sinden is from Admiral Markets. SOUNDBITE: Darren Sinden, market commentator, Admiral Capital Markets, saying (English): "The rouble has effectively halved in value. They're receiving a lot less in dollar income via the sale of oil and other commodities and food prices at home in Russia are biting." Many of Europe's luxury firms are preparing for a tough year thanks to the crisis. LVMH's watch brand Hublot has already seen sales fall by 20 percent. And Italian fashion group Roberto Cavalli is predicting a similar drop. Russian tourists are major buyers of other Milan favourites too. French lingerie maker Maison LeJaby has even axed 50 jobs - that's more than a quarter of its workforce - because it relies on Russia for 30 percent of its turnover. Tourism is also being affected. 30 percent of Egypt's visitors normally come from Russia. In December it saw numbers fall by 50 percent. Turkey has also been hit. So too have some ski resorts. Austria's Solden and Courchevel in France are Russian favourites But visitor numbers in the French resort are down 30 percent this year. And they say those that did come - spent less. Commerzbank's Peter Dixon's points to Switzerland as one of the worst hit. SOUNDBITE: Peter Dixon, Global Financial Economist, Commerzbank, saying (English): "We're certainly seeing reports from the tourist industry that bookings this year have taken a big tumble. So yes there was going to be a big whole at the top end of the market for luxury goods producers which is going to weigh on their bottom lines come the end of 2015." Airlines have also been hit. Several, including Emirates, have cut the number of flights to Russia. All this comes as the Ukraine crisis depends and more sanctions are threatened. Russia's economy is showing no signs of improvement either. After a three-day holiday weekend, the rouble weakened again and oil prices slipped to a two-week low.