Economic news these days is pretty bleak: job growth is anemic, retail sales are stagnating, and consumer confidence is plummeting. But the luxury goods market is another story. Today, the French company Hermes raised its 2011 income forecast by 12 to 14 percent on growing demand in the U.S. and China for its silk scarves and leather handbags. Last week, Burberry, which makes raincoats and leather goods, beat its revenue forecast for the first quarter of 2011. According to Reuters, investors are now pouring money into luxury stocks.
Rebound in U.S. and Europe In a May report, Bain & Company predicted that global luxury goods sales would increase 8 percent in 2011 in part as a result of renewed demand in the U.S., where department shop sales are increasing and Europe, where tourism is strong. "If customers tightened their purse strings in 2009, spooked by the financial crisis, and 2010 was the year they started loosening them again, 2011 should see a return to normal luxury goods consumption," Reuters wrote at that time. The luxury goods industry experienced its worst year on record in 2009 as a result of slackening demand in the U.S. and Southern Europe.
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