A set of luxury retailers reported earnings today. Tiffany & Co. and Williams-Sonoma both reported strong quarterly sales. Is luxury back?
Here's a blurb from the Wall Street Journal on Tiffany's:
In the Americas, sales rose 14% to $523.5 million. U.S. same-store sales rose 11%, including a 22% increase in the New York flagship.
Interestingly, analysts expected an even better result, so its stock is taking a beating today. But this is a pretty nice gain in sales for the company.
And for Williams-Sonoma, Reuters reports:
Net sales rose 8.1 percent to $1.09 billion, beating the analysts' average forecast of $1.07 billion. Sales at stores open at least a year rose 7.6 percent.
The Williams-Sonoma Corporation owns not only its namesake stores, but also high-end retailers Pottery Barn and West Elm. It further expects same-store sales to rise 8% to 11% this quarter. Those are pretty strong results and expectations.
Does this data indicate that luxury retailers' suffering is over? During the recession the rich were hit particularly hard. That took a toll on companies like Tiffany and Williams-Sonoma that rely on wealthier customers. Obviously, these are only two data points in a large market, but looking at these results, I think it's hard to argue that luxury won't be experiencing a pretty solid rebound, as they are very characteristic of the broader industry.
Other news we've been seeing recently about the rich getting richer would also indicate that luxury should be faring better. Let's face it: these retailers don't need unemployment to decline. As the stock market and corporate profits improve that should directly help their target population. And wealthy individuals with a lot of equity holdings or jobs in corporate management are definitely feeling much richer than they were a year ago. That should make them more comfortable buying more luxury goods.
Just as the wealthy generally recover more quickly coming out of a bubble-based recession, so should luxury.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.