Looks like affluent people are feeling safe about spending again: Coach says its fiscal third-quarter sales jumped 12%, and Burberry says that its retail sales gained 15% in the second half.
Patricia Pao -- head of the Pao Principle, a New York-based consulting company -- says she isn't surprised, and that the strong pickup some luxury retailers saw over the holidays is building steam. "The Chanel boutique in Houston basically was out of merchandise four days before Christmas," she tells Marketing Daily. "During the recession, it was not considered 'cool' to shop. So right now, people with money are spending because of that pent-up demand. And interestingly, so are people with less money, not just because of pent-up demand, but also due to the new merchandising direction of prints and bright colors."
At Coach, sales rose 12% to $831 million for its third fiscal quarter while net income jumped 37% to $158 million, from $115 million reported for the prior year. (Excluding a one-time charge from the previous year, net income rose 28%.) On a same-store basis in North America, sales gained 5.1%.
"Our excellent third quarter results showed further strengthening of our full-priced businesses across all geographies and channels," CEO Lew Frankfort says in its release. Sales in China are still growing rapidly, and the company says it also plans to expand in Western Europe, opening 14 locations in Printemps stores throughout France over the next three years. (The first opens in Paris in June.) And through a separate agreement with British retailer Hackett Limited, it will open Coach stores in the U.K., Spain, Portugal and Ireland.
At Burberry Group plc, total sales gained 6% for the half -- stronger than its forecast--with retail sales climbing 15%. Same-store sales grew by 10% -- gains it says were driven by steady demand for full-price goods in its spring and summer lines. The company says it expects a retail sales increase of about 10% for the full fiscal year.
"While the pace and level of the global economic recovery remain unclear, we remain confident that our strategies will continue to build momentum," CEO Angela Ahrendts says in its earnings release. "To drive growth, we will increase investment in new regions, initiatives and digital commerce, while taking further action to enhance the brand."