Europe's consumer sector stalwarts such as LVMH Moët Hennessy - Louis Vuitton Société Européenne, Kering SA, H & M Hennes & Mauritz AB (publ), Pernod Ricard SA and Anheuser-Busch Inbev SA, which reported signs of recovery in the most recent quarter, now face another hit to demand as several European countries impose new restrictions to fight a surge in COVID-19 cases.

England on Nov. 5 entered its second lockdown for four weeks. France, Germany, Austria, Switzerland, Belgium, Italy, the Netherlands and Spain have also planned either some form of lockdown or tougher curbs on movement and gatherings. The measures will have an impact on luxury good companies, clothing retailers and suppliers of beer and spirits who are struggling in the face of the shutdown of bars, nightclubs and restaurants.

Europe's leading luxury companies, which depend heavily on tourism-driven duty-free trade and sales at physical stores, were hit hard in the first months of the COVID-19 pandemic. They now face a renewed bout of uncertainty as they head into what should be their most lucrative time of year, the Christmas holiday shopping season. While online purchasing will offset some of the lost revenue from brick-and-mortar outlets, it may not be enough.

"Q4 is a relatively big quarter for luxury companies, making up one-third of the average revenue for the sector," said Zuzanna Pusz, analyst at UBS, in an interview. "This year it carries an even bigger weight given the store closures in the second quarter." If store footfall declines significantly, "it would be a big hit to earnings."

In France, luxury goods stores and other non-essential businesses shut their doors on Oct. 30 and will stay closed until Dec. 1. France accounts for about 6% of global luxury goods sales. According to UBS, approximate percentage sales exposure to France are 13% for Hermès International Société en commandite par actions, 9% for LVMH, 8% for Compagnie Financière Richemont SA, about 6% for Kering and Moncler SpA. Swatch AG, Burberry Group PLC, Prada SpA, Tod's SpA and Salvatore Ferragamo SpA each derive about 5% of their sales from France. Moncler, which makes puffer jackets and makes about half of its annual profit in the fourth quarter, is especially vulnerable, according to Pusz.

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Stay at home orders aren't good for the beauty business either. On Oct. 22, the world's biggest cosmetics company, L'Oréal SA, said its third-quarter sales fell 2.2%, partly because homebound consumers bought fewer makeup products. The environment "remains difficult and uncertain," said Jean-Paul Agon, chairman and CEO, in a statement.

More broadly, European consumers are changing the way they shop. According to Sept. 2 report by PwC, 40% of European consumers have suffered a fall in household income because of the pandemic. As a result, 38% plan to reduce their spending over the next few months. "Consumers in the countries that have been most severely affected by the pandemic are particularly determined to spend less: 56% in Spain, 43% in the UK, and 42% in Italy. This means discretionary spending will be postponed or avoided altogether, and consumers will look for cheaper offers," the report concluded.

That has caused many drinks companies to struggle. "While we expect that the second half of this year will be better than the first, the environment remains very volatile and uncertain, especially as we see now increased on-premise restrictions in several markets like Europe," said CEO Carlos Brito of AB InBev, on an Oct. 29 earnings call with analysts. Pernod Ricard's CEO Alexandre Ricard was more blunt about the last three months of the year. "We expect a second quarter that will be heavily impacted by the COVID crisis," Ricard told Reuters.

On Nov. 2, all German restaurants, bars, restaurants and entertainment venues were temporarily closed for a month to fight a rising tide of COVID-19 infections. "Even if the German government announced to pay companies hit by the second lockdown a grant of 75% of their November 2019 turnover (around €10 billion in total), renewed uncertainty, lockdown-fatigue, job losses and bankruptcy fears will dent confidence, spending and investment," wrote Carsten Brzeski, global head of macro at ING Research, in an Oct. 29 research note. "A double-dip now looks unavoidable."

Germany's restaurant industry saw its turnover plunge 40.5% between March and August 2020 compared to the same period in 2019, while the number of people employed by the industry fell 17.6%, according to the country's statistics office. In the hotel sector, there were 14.2% fewer overnight stays in Germany in August 2020 compared to the year-ago period, while overnight stays by overseas visitors fell 56% from the previous year.

The clothing trade has also suffered. Between the months of February 2020, before the pandemic began in Europe, and August 2020, Europe's textiles, clothing and footwear segment recorded the biggest drop across all types of retail activity, falling 10.7%, according to Eurostat. Though the sector has staged a partial recovery since then, companies have scrambled to adjust. On Oct. 1, Sweden's H&M reported third quarter profit that beat expectations, but also said it would close 250 stores in 2021 to focus more on its online business.

In the automotive sector, Europe-wide sales fell 29% year over year during the first nine months of the year, and carmakers say they expect some impact from renewed lockdowns on top of an economic downturn that is stifling demand for big-ticket items. Most companies in the sector are coming off the back of a stronger-than-expected third quarter and have adapted to ensure some continuity on the retail side in the coming months.

"We believe the situation is slightly different compared to the situation we were facing in spring when we had really a more 100% lockdown," said Bayerische Motoren Werke AG CFO Nicolas Peter on a Nov. 4 earnings call. "We expect that the showrooms will be closed in some markets. However, deliveries and workshop services will still be possible. We expect an impact, but not as severe as the one we had between Q1 and Q2."

The coronavirus pandemic isn't bad news for everyone. Reckitt Benckiser Group PLC, maker of Dettol disinfectant and Lysol cleaning products, on Oct. 20 raised its 2020 outlook for the second time after reporting better-than-expected growth in third-quarter sales as the pandemic boosted demand for its hygiene products.

"Meeting the global demand for Dettol and Lysol has been a priority for the business," said CEO Laxman Narasimhan on a third-quarter call with analysts. "Since the start of the year, we have taken Dettol and Lysol into 19 new countries and expanded the reach of different products, for example, taking Dettol hand sanitizer into 20 new markets and Dettol wipes into 13 new markets."

And even though the renewed curbs will hurt many European consumer businesses, they could bounce back more quickly this time. "I don't expect the impact [on luxury companies] to be as bad as it was in the third quarter," said Pusz of UBS. "Companies are better prepared to deal" with the disruption. "Investors will remember how quickly things went back to normal."