Luxury Goods Purchases Slowing Down

Раздел: Новости на английском
02 января 2008 г.

(RAPAPORT) Financial Times, UK: It has not been a Merry Christmas season in the world of luxury goods. Shares in companies ranging from handbag maker Coach to jewellers Bulgari and Tiffany have sunk amid fears that a possible slowdown would cut into sales. The world luxury index, created by Deutsche Borse this year to allow investors to track what was seen as a vibrantly growing sector, is down almost 16 per cent from its peak in early June.

Most companies are still reporting revenue and earnings growth but the double-digit jumps of the past few years may be a thing of the past. Luxury goods, particularly those manufactured on a large scale by public companies, are no longer immune to worries about flagging consumer confidence. Worldwide expansion and lower-priced items aimed at the merely well-off may have made luxury companies more vulnerable to cyclical trends, particularly in the US and Japan. In the last recession, watchmakers were hit harder because they, unlike the fashion and leather houses, sold their wares through independent retailers and, as a result, inventories built up.

Some companies are more recession-proof than others and their shares may have been sold off more heavily than they deserve. Companies that aim at top-end consumers – Hermes, Cartier – are likely to fare better than those dependent on a wider range of customers: sales of super-jumbo yachts reportedly remain strong, while orders for boats under one million dollars are a lot weaker. The big conglomerates – LVMH, PPR and Richemont – also have advantages over the monobrands because they are able to demand lower advertising rates and grab the best locations, whether in free-standing stores or department store concessions.

Despite worsening industry conditions, Prada and Salvatore Ferragamo have picked advisers for initial public offerings in the coming year, adding supply to an already soggy sector. The rarity value of the stocks, like the goods themselves, seems to be in decline.


Copyright © 2007 Financial Times Ltd.
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