Ignore for a moment the depressed real estate market, $3-per-gallon gas prices and long lines at the unemployment office. Despite all the gloom, this could be a good year for luxury retailers. Seriously.
The poster child for this trend is Saks (SKS).
The jobless will probably not be shopping here: The featured offering on the Saks web site is Yves Saint Laurent’s new $1,400 purse. Yet same-store sales at Saks are up an average of 6.3% over the past three months.
And investors are getting excited about Saks’ prospects. So far this year, Saks shares are up 40%. That’s 35 percentage points more than the broad S&P 500 and 30 points more than other consumer discretionary stocks within the index. In fact, this year Saks has outpaced every one of the 70 consumer discretionary retailers in the S&P 500.
It’s not that all American consumers have decided they can splurge on designer goods. Rather, only particular American consumers are opening their wallets again.
– From BusinessWeek