A number of luxury brands have weathered the global economic crisis surprisingly well, but a sense of uncertainty about the future is haunting the sector, industry executives say. Even executives at the companies where sales have held up are well aware that the trend may not last.
"We have absolutely no visibility into 2009," Christian Blanckaert, executive vice president at Hermès International, said Wednesday. "We are talking only month to month." Hermès has continued to grow despite the economic downturn. This month, it cheered investors with better than expected annual results and even raised its dividend slightly. The company has been buoyed in particular by sales of leather handbags.
Hermès has projected flat sales for 2009, and Mr. Blanckaert was the among the featured speakers on the first day of the International Herald Tribune's eighth conference on luxury, at the historic Imperial Hotel. Other luxury companies that have recently reported better than expected growth include Burberry, LVMH Moët Hennessy Louis Vuitton and PPR, the French company that owns a stable of storied brands like Gucci and Yves Saint Laurent. But other segments of the industry have been pummeled. For instance, Bulgari, the Italian jewelry and watch manufacturer, saw net profit nearly halved last year, while Bayerische Motoren Werke, the German carmaker, saw profit fall by 90 percent.
François-Henri Pinault, chairman and chief executive of PPR, delivered the keynote address. "We don't have any secure forecast to make about any recovery," Mr. Pinault said. A number of industry executives at the conference said that, in contrast to previous economic slumps, the nature of the current crisis made it unusually difficult to gauge consumer sentiment and project future results.
Mr. Blanckaert said that the sudden currency fluctuations that had accompanied this meltdown had led to extreme instability in revenue and made it difficult to price products across markets. Mr. Pinault said that the effects of the credit crunch had compounded a general drop in consumer confidence, making it harder to predict demand.