Has Luxury's Economic Immunity Come to an End?


Louis Vuitton Spring 2013

Luxury groups might finally slow their roll in 2013.  After a couple years of seemingly recession-proof growth, Standard & Poor’s is predicting that next year, major luxury goods makers will continue to grow, but finally see lower profit margins.

An interesting set of numbers from the report, of which we weren’t previously aware, are 2011 growth rates from LVMH, PPR, and Remy Cointreau (arguably the luxury conglomerate world’s Big Three).  Respectively, they each grew by 14%, 22%, and 25% that year.  In a still-tough global economy, that’s incredible — no wonder they’re finally slowing down. (Although we bet recent astronomical luxury price hikes will keep the slowdown from going too far.)

Based on lower growth rates in 2012, however, luxury brands are expected to have revenues increase only in the single digits in 2013.  But Standard & Poor’s outlook for the field is positive across the board.  Looks like the middle-priced conundrum of the high-low shopper is something that’s still not going away next year.