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April 19 (Bloomberg) -- Lisa Hagen bought a $395 Diane von
Furstenberg sundress at Barneys New York last week, paying 58
percent more than she did for a similar dress two years ago.
“A lot of the high-end designers are at remarkably high
prices,” said Hagen, 51, a marketing consultant in New York.
Still, she said, “I am willing to pay higher prices and full
prices if I like it, it fits my need and I know I will use it.”
Luxury chains including Barney’s and Saks Inc. are selling
costlier goods after scaling back discounts and promotions they
offered to attract shoppers in the recession. Tiffany & Co.
raised prices across the store. U.S. sales of luxury goods may
rise 4 percent in 2010 after falling to $60 billion last year
from a 2007 record of $72 billion, according to Bain & Co.
“The get-it-cheap party for luxury consumers has ended,”
said Milton Pedraza, chief executive officer of the New York-
based research firm Luxury Institute. “When consumers now turn
over the product and look at the price, they see that those days
of incredible discounts on luxury goods are over.”
The higher prices are helping retailers improve their
profitability after posting losses during the recession. Saks
forecast an improvement this year in gross margin -- the
fraction of revenue left after subtracting the cost of goods
sold. Dallas-based luxury chain Neiman Marcus Group Inc. said
margins improved by 7 percentage points in its most recent
quarter because markdowns were so much less.
Saks rose 24 cents, or 2.6 percent, to $9.56 at 10:26 a.m.
in New York Stock Exchange composite trading. It climbed 42
percent this year before today. Tiffany dropped 30 cents to
$49.90. Its year-to-date gain before today was 17 percent.
More Costly
Saks had been the “poster child” for discounting,
Chairman and CEO Stephen Sadove said in an April 15 Bloomberg
panel discussion. The chain has since reduced inventory and is
offering fewer discounts to sell more merchandise at full price,
he said.
“You’re getting back to the basics of what the category
was all about,” Sadove said.
The average ticket price for U.S. luxury goods excluding
jewelry jumped 11 percent in March from a year earlier, after
year-over-year gains of 10 percent and 6.4 percent in February
and January, respectively, according to MasterCard Advisors’
SpendingPulse data. The March gain was the biggest in the past
two years. The steepest drop was a 13 percent decline in
December 2008.
Annual Bonuses
SpendingPulse, based in Purchase, New York, measures retail
sales across all payment forms, including cash and checks. For
its luxury measures, the firm isolates the top 10 percent of
ticket prices in the high end of clothing and leather goods.
Luxury consumers have returned to the stores after stock
markets rebounded, housing prices stabilized and Wall Street
firms paid their annual bonuses. Sales of luxury goods soared 23
percent in March from a year ago, SpendingPulse said.
In the last months of 2008, luxury retailers discounted
goods by as much as 70 percent to clear inventories that became
bloated after consumer spending nosedived in the aftermath of
the Lehman Brothers Holdings Inc. bankruptcy and the global
financial crises.
Prices may continue to climb this year as fall merchandise
flows into U.S. stores this summer.
“We are hearing that for fall sets, stores are looking to
bring some higher-priced goods,” said Sapna Shah, principal of
Retail Eye Partners, a New York-based retail research firm.
No Slam-Dunk
The average price of a luxury handbag sold at U.S.
department stores is rising to $1,800 this year after falling to
$1,600 last year from a pre-recession $2,000, Hana Ben-Shabat, a
retail expert at the A.T. Kearney management consulting firm in
New York, forecast in an April 15 telephone interview.
“They will do the slight increase if they can get away
with it,” Pedraza said. “It’s not a slam-dunk.”
At Barneys, shoppers in December 2008 could buy Tod’s men’s
chocolate brown penny loafers for $269, down from $390. On April
16, the Barneys Web site offered similar loafer styles at $395
to $495.
Dawn Brown, a Barney’s spokeswoman, declined to comment on
pricing. The chain is privately held.
Tiffany’s Web site on April 16 offered a Metro mini diamond
cross necklace at $675, up 23 percent from the in-store price on
Feb. 24. A Paloma Picasso green Zellige aventurine ring was at
$525, an 11 percent increase.
Chanel, Charvet
Tiffany, the world’s second-largest luxury-jewelry
retailer, raised its prices at the end of February for the first
time in a couple of years to reflect higher product prices, said
spokesman Mark Aaron. The average increase was more modest than
the two examples above, Aaron said, without providing specifics.
The New York-based chain doesn’t discount its products.
Calls to Bergdorf Goodman stores revealed that a Jumbo
Classic quilted Chanel handbag in black “caviar” texture with
a leather gold chain is $2,995, up 20 percent from three years
ago, and that men’s Charvet shirts start at $450. They were
$425.
Salvatore Ferragamo ties cost $160 on the Bergdorf Goodman
Web site. Three years ago they were $135. Men’s black Gucci
loafers with silver horsebit buckles were priced at $475 to
$595, compared with $450.
“Prices fluctuate based on exchange rates, materials and
design features,” Ginger Reeder, a spokeswoman for Neiman
Marcus, said in an April 18 e-mail.
Saks’s recent sales gains have been driven partly by an
increase in the average price per unit sold, said Julia Bentley,
a spokeswoman. A larger number of transactions also was a
factor, she said. Comparable sales jumped 13 percent in March.
‘Desire Is Improving’
Neiman Marcus has also noted a recovery in sales at the
highest prices.
“Desire is improving,” Neiman Marcus Chief Financial
Officer Jim Skinner said March 26 at an investor conference.
“Some of the hottest things we’re selling are at the very
upper, upper end of our price range.”
Saks’s “substantial” rebound in full-price selling is
helping its profitability, CEO Sadove said.
Gross margin jumped to 36.5 percent in the quarter that
ended Jan. 30 from 21.2 percent a year earlier. The New York-
based department-store chain said it expects that to widen to as
much as 38 percent this year from 36.6 percent last year.
“There’s no question that an increase in full-price
selling has a positive effect,” Sadove said.
Hagen, whose clients include Paris Residence Club, a
collection of fractional ownership properties in the French
capital, said she’s happy to pay for Domenico Vacca silk three-
button shirts, which have cost $790 for the past five years,
according to spokeswoman Laura Laudiero.
“I buy those shirts no matter what the price,” Hagen
said. “Investment dressing!”
For Related News and Information:
Consumer & Retail headlines: RTOP
Luxury goods headlines: NI LUX
Retail sales figures: RTSL
Clothing news: NI CLO
Stories on personal wealth: NI PW
Furstenberg sundress at Barneys New York last week, paying 58
percent more than she did for a similar dress two years ago.
“A lot of the high-end designers are at remarkably high
prices,” said Hagen, 51, a marketing consultant in New York.
Still, she said, “I am willing to pay higher prices and full
prices if I like it, it fits my need and I know I will use it.”
Luxury chains including Barney’s and Saks Inc. are selling
costlier goods after scaling back discounts and promotions they
offered to attract shoppers in the recession. Tiffany & Co.
raised prices across the store. U.S. sales of luxury goods may
rise 4 percent in 2010 after falling to $60 billion last year
from a 2007 record of $72 billion, according to Bain & Co.
“The get-it-cheap party for luxury consumers has ended,”
said Milton Pedraza, chief executive officer of the New York-
based research firm Luxury Institute. “When consumers now turn
over the product and look at the price, they see that those days
of incredible discounts on luxury goods are over.”
The higher prices are helping retailers improve their
profitability after posting losses during the recession. Saks
forecast an improvement this year in gross margin -- the
fraction of revenue left after subtracting the cost of goods
sold. Dallas-based luxury chain Neiman Marcus Group Inc. said
margins improved by 7 percentage points in its most recent
quarter because markdowns were so much less.
Saks rose 24 cents, or 2.6 percent, to $9.56 at 10:26 a.m.
in New York Stock Exchange composite trading. It climbed 42
percent this year before today. Tiffany dropped 30 cents to
$49.90. Its year-to-date gain before today was 17 percent.
More Costly
Saks had been the “poster child” for discounting,
Chairman and CEO Stephen Sadove said in an April 15 Bloomberg
panel discussion. The chain has since reduced inventory and is
offering fewer discounts to sell more merchandise at full price,
he said.
“You’re getting back to the basics of what the category
was all about,” Sadove said.
The average ticket price for U.S. luxury goods excluding
jewelry jumped 11 percent in March from a year earlier, after
year-over-year gains of 10 percent and 6.4 percent in February
and January, respectively, according to MasterCard Advisors’
SpendingPulse data. The March gain was the biggest in the past
two years. The steepest drop was a 13 percent decline in
December 2008.
Annual Bonuses
SpendingPulse, based in Purchase, New York, measures retail
sales across all payment forms, including cash and checks. For
its luxury measures, the firm isolates the top 10 percent of
ticket prices in the high end of clothing and leather goods.
Luxury consumers have returned to the stores after stock
markets rebounded, housing prices stabilized and Wall Street
firms paid their annual bonuses. Sales of luxury goods soared 23
percent in March from a year ago, SpendingPulse said.
In the last months of 2008, luxury retailers discounted
goods by as much as 70 percent to clear inventories that became
bloated after consumer spending nosedived in the aftermath of
the Lehman Brothers Holdings Inc. bankruptcy and the global
financial crises.
Prices may continue to climb this year as fall merchandise
flows into U.S. stores this summer.
“We are hearing that for fall sets, stores are looking to
bring some higher-priced goods,” said Sapna Shah, principal of
Retail Eye Partners, a New York-based retail research firm.
No Slam-Dunk
The average price of a luxury handbag sold at U.S.
department stores is rising to $1,800 this year after falling to
$1,600 last year from a pre-recession $2,000, Hana Ben-Shabat, a
retail expert at the A.T. Kearney management consulting firm in
New York, forecast in an April 15 telephone interview.
“They will do the slight increase if they can get away
with it,” Pedraza said. “It’s not a slam-dunk.”
At Barneys, shoppers in December 2008 could buy Tod’s men’s
chocolate brown penny loafers for $269, down from $390. On April
16, the Barneys Web site offered similar loafer styles at $395
to $495.
Dawn Brown, a Barney’s spokeswoman, declined to comment on
pricing. The chain is privately held.
Tiffany’s Web site on April 16 offered a Metro mini diamond
cross necklace at $675, up 23 percent from the in-store price on
Feb. 24. A Paloma Picasso green Zellige aventurine ring was at
$525, an 11 percent increase.
Chanel, Charvet
Tiffany, the world’s second-largest luxury-jewelry
retailer, raised its prices at the end of February for the first
time in a couple of years to reflect higher product prices, said
spokesman Mark Aaron. The average increase was more modest than
the two examples above, Aaron said, without providing specifics.
The New York-based chain doesn’t discount its products.
Calls to Bergdorf Goodman stores revealed that a Jumbo
Classic quilted Chanel handbag in black “caviar” texture with
a leather gold chain is $2,995, up 20 percent from three years
ago, and that men’s Charvet shirts start at $450. They were
$425.
Salvatore Ferragamo ties cost $160 on the Bergdorf Goodman
Web site. Three years ago they were $135. Men’s black Gucci
loafers with silver horsebit buckles were priced at $475 to
$595, compared with $450.
“Prices fluctuate based on exchange rates, materials and
design features,” Ginger Reeder, a spokeswoman for Neiman
Marcus, said in an April 18 e-mail.
Saks’s recent sales gains have been driven partly by an
increase in the average price per unit sold, said Julia Bentley,
a spokeswoman. A larger number of transactions also was a
factor, she said. Comparable sales jumped 13 percent in March.
‘Desire Is Improving’
Neiman Marcus has also noted a recovery in sales at the
highest prices.
“Desire is improving,” Neiman Marcus Chief Financial
Officer Jim Skinner said March 26 at an investor conference.
“Some of the hottest things we’re selling are at the very
upper, upper end of our price range.”
Saks’s “substantial” rebound in full-price selling is
helping its profitability, CEO Sadove said.
Gross margin jumped to 36.5 percent in the quarter that
ended Jan. 30 from 21.2 percent a year earlier. The New York-
based department-store chain said it expects that to widen to as
much as 38 percent this year from 36.6 percent last year.
“There’s no question that an increase in full-price
selling has a positive effect,” Sadove said.
Hagen, whose clients include Paris Residence Club, a
collection of fractional ownership properties in the French
capital, said she’s happy to pay for Domenico Vacca silk three-
button shirts, which have cost $790 for the past five years,
according to spokeswoman Laura Laudiero.
“I buy those shirts no matter what the price,” Hagen
said. “Investment dressing!”
For Related News and Information:
Consumer & Retail headlines: RTOP
Luxury goods headlines: NI LUX
Retail sales figures: RTSL
Clothing news: NI CLO
Stories on personal wealth: NI PW
myself for sleeping on this
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