Demand for luxury products has been a real mixed-bag this year. While some of the major brands that have been depended on to hold up the market in the past are announcing serious shortcomings, others are picking up the slack and even raising their sales growth targets. So can we safely assume that the failing of some of the major luxury stocks are brand specific and is not reflective of the general market? Maybe.
Luxury Goods across the Board
Taking a look at European luxury goods that are doing well, right off the bat we can see Hermes International, which enjoyed increased profits of 28% in the first half of 2012. With a soaring demand of its products coming out of Asia, the French company beat its estimates that resulted in increasing the sales and growth targets. Salvatore Ferragamo's Italian design house followed suit by posting a profit growth for the most recent quarter that reached the double digits. Crossing over to the US luxury retailers, Coach is showing nice earnings through its approach of lowering prices to keep the customers coming, which has proven to be a well rewarded effort. Michael Kors followed a similar line by offering designer goods that are very affordable and in rebranding a collection of Fossil chronograph watches and accessories that has been very successful.
High End Market
It seems that many of the companies that position themselves at the top end of the luxury market are the ones that appeal to the wealthy buyers. The Chinese are continuing to do their part in maintaining the strength of the international luxury market. So long as the Chinese continue to increase in wealth and reward themselves with luxury items, the high-class brands can hope to enjoy continued growth. Although the Chinese market is changing, it is still growing in sophistication and to date there has been no significant decline. Even as their spending patterns remain cautious, the demand for luxury products continue to grow, pushing up prices and profits around the world.