It has been a recurring theme on these pages for some time now: Luxury goods and retailers are feeling the pinch of The New Frugality, too. Today's news mostly piles on.
Reporting
from Rome for the
New York Times, Nelson D. Swartz writes about the impact of the first recession in luxury-goods sales in nearly 20 years on companies such as Bulgari, Burberry, Cartier and
Montblanc in
"When the Lavish Cut Back." And, for subscribers only,
Women's Wear
Daily fleshes out
"Flaunting Days Are Over As Consumers Cut
Back." The
Journal, meanwhile, reports that "hip retailer" Abercrombie & Fitch took a hit last month when it "refused to join the rush to
discount" while its rivals have been slashing prices in an attempt to woo reluctant shoppers. American Eagle Outfitters ran a buy-one-get-one-half-price sale this month for all its tops, for
example, and Aeropostale marked down some goods as much as 70%. But Abercrombie held firm so that the brand was not "seen as something cheap."
"We hear your
concerns," chairman and CEO Michael Jeffries told analysts in an earnings call, but "promotions are a short-term solution with dreadful long-term effects."
Abercrombie
reported last week that November sales in stores open more than a year were off 28% from 2007, significantly worse than at competitors who discounted. On the other hand, it closed the quarter with
relatively high gross margins of 66%. By comparison, American Eagle's same-store sales slid 11% and gross margins dropped 6.4 percentage points to 41% of sales
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