When the year started, luxury looked invincible.
Billionaires from emerging markets flaunted their wealth, million-dollar diamond necklaces flew out the door and stratospheric sums were being spent on contemporary art.
This story first appeared in the December 15, 2008 issue of WWD. Subscribe Today.
Those three elements came together strikingly in January when, to celebrate its 150th anniversary, Boucheron hosted a gala dinner and juxtaposed pieces from its owner François Pinault’s private art collection — think Damien Hirst and Jeff Koons — with ultraexpensive baubles.
The luxury party raged again in February, when Gucci inaugurated a megaflagship in New York’s Trump Tower. And in April, LVMH Moët Hennessy Louis Vuitton got in on what seemed the everlasting boom of Swiss luxury watches by purchasing fast-growing brand Hublot.
Even as signs of economic turmoil grew, LVMH and PPR, the French firm that owns Gucci Group, continued to report brisk double-digit sales growth in the first quarter of the year.
In September, LVMH signaled its continued confidence in uberluxury when it signed a deal to acquire Royal van Lent, a Dutch firm that makes yachts costing more than $30 million.
Earlier in the year, at the watch fairs in Basel and Geneva, Switzerland, the mood was buoyant, with most manufacturers saying that the top end was driving business.
Watches blinged out with diamonds and complications garnered the most attention. Fashion companies even got in on the ultraexpensive watch segment. Versace launched a made-to-order watch dripping with diamonds that costs 140,000 euros, or $204,600 at current exchange. Roberto Cavalli introduced a more expensive line called Diamond Time and Dior created a diamond-encrusted tourbillon watch that costs $475,000.
But with the end of the summer, as stock markets reeled and Lehman Brothers went broke, the mood started to turn bleak. Compagnie Financière Richemont, which had been enjoying rapid expansion, said sales of its top watch brands, including Cartier and Van Cleef & Arpels, started to show weakness in October, particularly in Europe and America.
LVMH said it was seeing softness in its least expensive Tag Heuer watches — despite continued strength at its marquee Louis Vuitton brand.
Fashion houses in Europe complained that many American retailers had reduced their orders by as much as 40 percent. What makes the picture darker is that some people worry the worst is still to come.