Sales of luxury goods, everything from apparel, to jewelry and leather goods, are likely to fall globally by 8% this year, to about $227 billion, according to a revised estimate.The forecast, to be released this morning by consultants Bain & Co., narrows the global decline that Bain had forecast six months ago. In April, it predicted a 10% world-wide sales drop for 2009, citing its expected first-half plunge of as much as 20% followed by stabilization in the second half…The U.S., which accounts for roughly a third of luxury-goods sales, remains the worst-hit market. Bain expects U.S. sales of high-end clothing, accessories, tableware, cosmetics and jewelry will drop by 16% this year.That compares with expected sales declines of 10% in Japan, and 8% in Europe. Together, the three “mature” consumer markets—the U.S., Japan and Europe—make up more than 80% of world-wide luxury good sales.
By Vanessa O’Connell, Oct 19, 2009 WSJ
Link to article
See also Robert Frank’s The Wealth Report mention of this Bain Report on Luxury Goods:“…The U.S. wealthy have started to recover, largely on the back of the stock market and investments. But it is possible that even if the U.S. wealthy regain ground, the big wealth growth may be shifting to China, India, Brazil and other developing countries.What is more, a change in mood is just as important as a change in money. So far, the American rich and the trading-up crowd are in no mood to splurge for high-price, high-visibility status goods.”
Link to Claymore/Robb Report Global Luxury Index Fund
The Claymore/Robb Report Global Luxury Index ETF (ROB) is truly a luxury ETF, investing globally in companies whose primary business is the provision of global luxury goods and services. ROB has significant holdings in Swatch (5.3%), PPR (5.2%), Christian Dior (4.7%), Luxottica (4.5%), Coach (4.4%) and Louis Vuitton (4.4%), names that are prohibitively expensive for most consumers, especially during a sharp economic downturn.
Not surprisingly, ROB saw huge losses over the last two years, but has rebounded since the market bottomed out in March. ROB is up more than 120% since the bear market lows earlier this year. Still, the fund is well below pre-recession levels, leaving plenty of room for further appreciation if this recovery continues to power along and consumers regain their taste for luxury.