Is Luxury Market Coming or Going?

Posted by: Charles DuBow on September 02

It’s easy to see why people might be a little confused about the state of the luxury market these days. In addition to my other duties here at Businessweek.com, I am also (shameless plug) participating in our new beta community site, the Business Week Business Exchange. The idea is that participants, both BW staff and anyone else who wants to, can create and maintain their own mini sites on virtually any business-related topic one can dream up and encourage other people to add content and comments. One of my topics, surprise, is Luxury Retailing. (Check it out, it’s pretty cool.)

Anyhow, the really useful thing is that in the months I have been doing this I have been reading practically every luxury retailing-related news story printed in English on the net. But, of course, when one reads so much about a single topic one inevitably encounters many different opinions and quite a lot of contradictions. Which takes me, finally, to the subject of this post: Is the luxury retail market in trouble or not?

According to the left-leaning folks at England’s Guardian newspaper, it is in deep designer doo doo. A story on August 31, “Luxury brands suffer as rich guard their millions” implies that in London shops such as Armani, Cartier, Louis Vuitton, De Beers and Asprey are seeing a big fall-off in business, a fall-off that will only continue to get worse because there’s no way that the uptake in business from developing markets such as Russia, China, et al, can offset the loss in revenue from mature markets like the U.S. Ugh. It looks pretty bad for $5,000 handbag makers.

But wait! Reuters, who keep its political views pretty well under wraps, has a different take. In a story that appeared on August 29, the writer says that “luxury brands show no sign of a let-up in demand.” Moreover, as the article points out: “France’s Hermes (HRMS), Gucci (GUCG) and Italy’s Tod’s (TODGF) all published earnings that topped or met market expectations on the back of impressive double-digit sales growth in the first half.”

Who to believe?