Luxury star Prada fell short of the consensus estimate of analysts with its Q3 profit. The report from the Italian firm could be a sector warning with Prada's results in China showing some signs of deceleration.
A stronger euro against the yen was also a bottom line drag for the company.
Execs with Prada said 'softening consumption patterns" in some key regions could continue to weigh on results.
The handbag market in Hong Kong is so strong that money lenders are using high-end handbags as collateral for loans.
In the U.S., the emerging demand for used high-end handbags has helped boost sales for pawn shop operators such as Cash America (CSH +0.6%) and EZCORP (EZPW -0.2%).
What to watch: The global luxury handbag market is ruled by Prada, Coach (COH -0.1%), Hermes (HESAF.PK), Louis Vuitton (LVMHF.PK), and powerhouse Michael Kors (KORS +0.5%). After surprising in H1, back-half projections could be harder to match.
A new study from MasterCard confirms a trend of slowing luxury spending - seen in earnings reports from jewelry sellers Tiffany (TIF -4.4%) and Signet Jewelers (SIG -4.5%) - with sales only increasing 1.8% in April after gaining 6.7% in Q1. Analysts say the supposedly non-cyclical wealth effect isn't holding up against economic headwinds. On watch: COH, KORS, EL, HESAF.PK.
Test Laszlo Birinyi's stock picking prowess with these five favored stocks: BP Prudhoe Bay Trust (BPT), Ralph Lauren (RL), Priceline (PCLN), Cummins (CMI) and Hermes (HESAF.PK). He says they were chosen to give investors some diversification, some play on energy and the economy, and some exposure to consumers.
"The story this year has been to try to go from the bottom up - not try to get themes, not try to get big ideas," Laszlo Birinyi says. "Look at individual names." With that in mind, his top five stock picks for 2011: Hermes International (HESAF.PK), Priceline (PCLN), Polo Ralph Lauren (RL), BP Prudhoe Bay (BPT), Cummins (CMI).