PARIS — Rather than face an industry downturn, luxury companies should see their earnings outpace many consumer and retail stocks, lifted by fast growth in emerging markets and improving exchange rates.
“We are sticking to our scenario of a gradual reversion to sustainable long-term organic growth of 7 to 8 percent for the industry” in the second half of 2008 and into 2009, HSBC said in a research report issued Monday.
“Optimistic does not mean blindly bullish,” Paris-based analysts Antoine Belge and Erwan Rambourg caution, also downgrading the stocks of Bulgari and Tod’s.
Still, they stressed that valuations in the sector “fail to reflect the fact that fast-growing client groups from Asia, Eastern Europe and the Middle East should alone add at least 6 percent to the sector’s top-line growth.”
HSBC estimates that these nationalities account for 30 percent of global sales, and should generate continued sales growth of about 20 percent annually in 2008 and 2009.
Resilience in the U.S. and Europe is seen linked to employment figures more than the housing market and gasoline prices.
“In contrast to previous slowdowns, we have so far observed that luxury goods appear not to be the first thing that U.S. and European consumers have stopped buying,” the report says, while noting that an expected rise in U.S. unemployment would have a negative impact on luxury consumption.
Meanwhile, HSBC contends the watch segment will be more vulnerable if “wealth effects” deteriorate and that larger groups will fare better than smaller companies.
HSBC has “overweight” ratings on Coach Inc., Christian Dior SA, PPR SA and Burberry Group plc.
Meanwhile, another report from New York’s Luxury Institute said luxury players should go on the offensive to combat the economic slowdown.
“There are a lot of brands around the world right now, which, instead of going on the offensive — that is, innovating new product, making news and delivering great service — are cutting back and trimming down as if the world was coming to an end,” said Milton Pedraza, chief executive officer of the institute, which on Monday released its 2009 Luxury Brand Status Index survey for women’s fashion in Europe.
The study, which ranked 20 of the most prestigious brands, according to feedback from 752 women ages 21 or older from the U.K., Germany, France and Italy with a minimum income of 60,000 euros, or $85,620, or 70,000 pounds, or $123,760 a year, was topped by classic European names Hermès, Chanel and Yves Saint Laurent, which ranked first, second and third, respectively. Hermès topped the poll in France and Italy, Yves Saint Laurent in Germany and Alexander McQueen in the U.K.
The survey also found that some labels, though ranking highly for the product itself, suffered due to the kind of service they offered. “One question we asked was, ‘Does it make you feel special?’ And that’s where a lot of brands don’t score highly,” said Pedraza. “Quality? Great. Unique and exclusive? Some brands are, but not all. The difference is how unique and exclusive a brand makes you feel across the full experience.”
In tougher times, especially, the level of service offered, both past and present, increases in importance. “It’s one of the things that was definitely neglected during the boon period and it’s coming back to haunt companies now,” Pedraza continued.
In Europe, in particular, where consumers, Pedraza believes, settle for “really lousy service,” he sees an opportunity for brands, which should look at high-end hotels for lessons on how to give hospitable experiences and services, thanks to highly trained staff.
“Everybody should be treated well, but some customers, by virtue of what they buy or what they could buy, should get special treatment,” he said. “Invest money now during the downturn on customer service and you’ll be far more resilient.”
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)