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‘Luxury goods to buck downtrends’
‘Luxury goods to buck downtrends’

‘Luxury goods to buck downtrends’

FMCG SUPPLIER NEWS

IOL Business - Nov 17th 2011, 10:21

Sales of luxury goods are holding steady in developed countries because most affluent shoppers have retained their buying power, according to international credit rating agency Standard & Poor's (S&P). 

“Luxury goods are selling very well in developing countries, such as Russia and China, as well as in Middle Eastern Gulf states,” Standard & Poor's credit analyst Nicolas Baudouin said.

In a new report titled “Can Luxury Goods Continue To Deliver Rich Returns In An Era Of Austerity?” the rating agency commented that given the recent and current global economic woes and a year of unusually extreme natural disasters, some would assume that luxury goods makers would be watching their products gather dust on shop shelves.

“Whereas the consumer goods sector in general is coping with the fragile recovery facing the spectre of a second recession in Western Europe, sales of designer handbags, premium quality cars, and other luxury goods continue to climb,” it quipped.

However, Baudouin cautioned that growth rates in the luxury industry should decelerate somewhat in 2012 from the 2010 and 2011 record figures.

“But we expect them to remain healthy on the back of strong momentum in emerging markets. We believe that credit quality in the luxury goods industry will continue to outperform the broader consumer goods sector in the coming years,” he said.

Proof of S&P's observations are echoed in the slew of stellar financial results from lux players in recent months, as worldwide demand for luxury goods mushrooms despite economic instability.

Last month, buoyed by big-spenders, French luxury products giant PPR, which counts Yves Saint-Laurent, Balenciaga, Stella McCartney and Alexander McQueen in its stable said third-quarter sales jumped 8%.

Similarly, maker of Kelly bags and silk scarves, Hermes International earlier this month said third quarter sales jumped 16%, while yesterday, luxury trench coat and designer handbag retailer Burberry reported a 41% jump in first-half net profit.

According to a study by Bain & Company, the luxury sector is set to post double-digit growth this year to Eur191 billion driven by the appetite of Chinese consumers.

The second-biggest luxury goods company in the world, Richemont (CFR) once again proved to have the Midas touch as it beat analyst forecasts to post a rise in first-half profit of 10% last week, boosted by robust sales in Asia.

The Geneva-based company which owns brands such as Cartier, Alfred Dunhill, Jaeger-LeCoultre and Montblanc is reaping the benefits from what has been dubbed as the “Age of Asian Opulence” - a considerable rise in wealth and hankering for upmarket trappings in the Asia-Pacific market. - I-Net Bridge  

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