Prada shoes, Hermes handbags and Valentino dresses are selling briskly, as are shares of the companies that own those luxury brands.
French luxury conglomerate PPR said yesterday its sales in the most recent quarter surged 17 percent, driven by demand in the US and Europe for its Gucci and Alexander McQueen labels. The news gave a boost to PPR’s shares, which are up nearly 15 percent over the past six months.
The recent buying frenzy for shares of luxury brands has been fueled partly by demand from the firms themselves.
LVMH — which counts Louis Vuitton and Fendi in its stable of prestigious brands — said this week it may enlarge a 17-percent stake it recently bought in Hermes. And last week, Tod’s CEO Diego Della Valle disclosed he has become the largest shareholder of Saks after amassing a 19-percent stake.
Luxury insiders are mounting such shopping sprees partly because the stock market’s recent rally is poised to fuel solid demand for pricey merchandise during the holidays — a trend that’s sure to boost profits.
But luxury bigwigs also appear to be betting on a sustained growth streak ahead, both here and in overseas emerging markets, according to Michael Appel of the consulting firm AlixPartners.
“From their perspective, it’s a long-term value play,” Appel told The Post. “There is a lot of wealth being created in places like China, and there are a lot of luxury brands that have tremendous potential in the coming years.”
While luxury spending is still well short of the lofty levels of 2005 and 2006, industry watchers say the psychology of wealthy shoppers has been as much of a problem as their bank accounts.
During the recession, “it just wasn’t cool to spend,” Appel said. Lately, however, the improving stock market “has given them a bit more confidence that things are moving in the right direction.”
It’s easier for the wealthy to be confident not only because they get bigger paychecks, but also because they’ve been relatively insulated from the spotty job market. While US unemployment hovers near double digits, the figure is less than 4 percent for those with incomes of $100,000 and up, according to consulting firm Bain & Co.
However, the moods of the wealthiest shoppers — while still the most upbeat — have cooled since the summer, according to Andrew Sacks of AgencySacks, a consultant to the luxury sector.
He speculates that the recent spate of insider buying in luxury is a reflection of operations that were streamlined during the recession and are now poised to reap higher profits as a recovery takes hold.
“So many of these companies are so much leaner, they’ve become efficient businesses again,” Sacks said.