As an indicator of a broader consumer spending trend, recent signs of improving luxury goods sales may predict a quicker rebound among higher-income individuals after the Christmas holidays.
According to Oppenheimer & Co. Senior Analyst Brian Nagel, in spite of easy comparisons to retail lows of 2008, one of the biggest drivers of better spending among consumers with more discretionary income last holiday season was the stock market.
¡°We¡¯ve seen the stock market have a pretty amazing run since its March lows, that I think helps to improve confidence broadly and really helps improve this spending ability of higher-income consumers,¡± said Nagel, whose luxury coverage universe includes Tiffany & Co. and Williams-Sonoma.
Particularly positive on Tiffany, which highlights the luxury retailer¡¯s cost-controlling measures and brand protection throughout the downturn, Nagel remarked, ¡°They didn¡¯t resort to discounting and thereby did not train their customers to look for discounts in stores. They really protected the brand. So from a sales perspective, they basically just took their lumps. When you look at comp store sales in the U.S., they¡¯re tracking down to 30%-plus, so they took the lumps.¡±

TIFFANY & CO. Tiffany 1837 lock ring

TIFFANY & CO. Return to Tiffany Oval tag ring

Tuesday, January 05, 2010