Luxury Retailers Immune to Holiday Spending Slowdown - Reuters

Luxury retailers are poised to have a more profitable holiday shopping season compared to lower-end retail and discounters, because high-end shoppers are better able to manage record fuel prices and housing market weakness, according to a report by Reuters. However even among luxury retailers, only the "upper crust will escape unscathed," while the lower end is "starting to crack under the economic pressures," say industry experts and retailers. "There is a group of consumers who are relatively immune to ... gas prices, rising interest rates, price of heating or cooling their homes ... layoffs -- the retailers that serve them are relatively immune," commented Fred Crawford, managing director of AlixPartners, a consulting and financial advisory firm. Saks Inc. and Polo Ralph Lauren Corp. both commented recently on sustained demand for their products and do not expect a slowdown this season. Tiffany & Co. and online jeweler Blue Nile Inc., also expect to do well, with both having raised their outlook. Milton Pedraza, CEO of the Luxury Institute distinguished between "affluent" and "wealthy" consumers, with the former having $100,000 to $300,000 in annual income, compared to $1M to $10M for the latter. Pedraza cites Coach Inc., as an example where affluent customers will curtail spending in favor of lower-end stores. One positive factor among all levels of luxury retail is strong demand from tourists due to the weak dollar, especially at flagship stores in Manhattan.

Sources: Reuters
Commentary: Recession Watch: 39% of Consumers Expect to Spend Less Than Last Year • Holiday Sales 2007: Understanding the True Story • High Energy Costs Could Rein In Holiday Spending - Survey
Stocks to watch: SKS, RL, TIF, NILE, COH. ETFs: RTH, XRT, ROB

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