The revival of the luxury industry is complete and the outlook for the future is bright; this is the message coming out strongly from the Reuters Global Luxury Summit 2011. Founders, CEOs and Presidents of companies with a variety of luxury products have indicated that the growth opportunities available in the global markets will keep the growth momentum going in the future. No doubt, it will require proper planning and its execution, control of costs and reading the trends correctly. The valuations have also hit a 52 week high and though the luxury as a segment is a good bet but it is advisable to keep a long term perspective.
We again bring to you eight top stories from the summit that gives you a comprehensive picture of the Reuters Global Luxury Summit 2011. The reported stories cover day 2 action and some day one action from New York.
1) Zadig & Voltaire not for sale: CEO
BRAND: Zadig & Voltaire
REPRESENTATIVE: Thierry Gillier, Founder & CEO
The stand: The company is not entertaining any private equity buyers as it has enough cash to finance its expansion plans.
The French fashion brand Zadig & Voltaire is growing fast and is flush with funds to execute its expansion plans. They plan to open almost 30 boutiques in some of the major cities including Rome and New York. They also hope to mark their entry into China with two flagship stores. They are being approached regularly by private equity buyers but the company has no plans of opening its capital. Thierry Gillier, the founder and CEO of the company was explaining the company’s stand at the Reuters Global Luxury and Fashion Summit in Paris.
2) Luxury execs see strong 2011, more M&A
REPRESENTATIVE: Multiple Senior Executives
Outlook: 2011 is expected to be one of the best for the luxury industry with the consumer confidence back.
Senior executives of practically all the top luxury companies are of the opinion that the natural disaster in Japan and the rising debt in Europe will not come in the way of the healthy growth of the luxury industry. The consumer spending in all sectors have registered strong growth be it hotels, cars, apparels or cosmetics. The easier availability of funds and increasing confidence will trigger a fresh round of mergers and acquisition.
3) Harry Winston plans rapid expansion
BRAND: Harry Winston
REPRESENTATIVE: Frederic de Narp, CEO
Plan: Aggressive expansion plans with a focus on China where they have a limited presence.
Frederic de Narp, CEO of Harry Winston was participating in the Reuters Global Luxury and Fashion Summit through phone from Shanghai. They plan to raise the number of their stores from 19 to 50 in the next five years, with ten of them located in China. The focus is on China as they see it as the most exclusive market in the world. There is a high level of confidence in the company that the sales will keep growing at 15%, year on year for the next five years.
4) Swiss&Global says good time for luxury
BRAND: Swiss & Global
REPRESETATIVE: Scilla Huang Sun, Fund Manager
The status: The fundamentals of the luxury industry are strong and the valuations are attractive as they have not recovered fully from the lows of recession.
The luxury companies are much better placed than they were before the economic crisis. This was the point made by Scilla Huang Sun at the Reuters Global Luxury and Fashion Summit in Paris on Tuesday. She manages the Swiss and Global’s luxury brands fund. The luxury companies have learnt to control costs during the recession and have increased their exposure to the emerging markets that are driving the growth. The current average market valuations are realistic keeping the 2012 earnings forecast in mind.
5) Italy’s Yoox open to tech sector buy
REPRESENTATIVE: Federico Marchetti, Founder & CEO
Outlook: The online retailer has clocked steady growth for five consecutive quarters and the momentum will be sustained.
The company will keep the growth momentum going by adding 5 to 6 brands a year and have no plans for an acquisition at the moment. Federico Marchetti told the Reuters Global Luxury and Fashion Summit on Tuesday that they are open to investing in technology if something worthwhile comes up. The China business is growing fast enough to become an important market for them but US is heading to become their no.1 market after displacing Italy.
6)Silver skull helps Theo Fennell regain sparkle
BRAND: Theo Fennell
REPRESENTATIVE: Theo Fennell, Founder & Creative Director
The status: After a disappointing Christmas business has bounced back for the British jeweler Theo Fennell.
The severe winter that closed the airports affected adversely the sales of Theo Fennell during last Christmas. Theo Fennell was talking at the Reuters Global Luxury and Fashion Summit in London. He explained that they were underprepared for Christmas but have bounced back since then and are confident about their new products, what they are doing and where they are going.
7) Coach focuses on priciest bags again
REPRESENTATIVE: Lew Frankfort, CEO
The trend: With increased consumer spending Coach is able to reverse the trend of releasing more of lower priced bags and move up market again.
The average bag price of Coach bags are going up as pricier and fancier bags are being released. Their CEO Lew Frankfort explained at the Reuters Global Luxury & Fashion Summit that they are not raising the prices despite higher costs but changing the mix of their offerings with more stress on the high end designs. They propose to deliver excellent value to their customers. This trend will be sustained in the near future.
8) Reuters Summit – Esplanade likes luxury long-term, just not now
BRAND: Esplanade Capital
REPRESENTATIVE: Shawn Kravetz, President
The advice: The top luxury stocks are too pricey and risky for a short term purchase but are compelling as 10 year opportunities.
The growth of the top luxury companies and positive forecasts based on strong demand has boosted the price of their stocks to 52 week highs. If you want to go according to Shawn Kravetz’s advice you should wait as the stocks are overvalued. The President of the Boston based hedge fund was talking at the Reuters Summit in New York. He feels that the high levels of debt and excessive exposure to the volatile Chinese markets make them a high risky buy. At the same time the growth potential of the emerging markets make the same companies compelling longer term investments. Luxury in general is a good investment.
Let us know if whats your take on luxury viral in your country.