Maybe That Louis Vuitton Bag Your Girlfriend Has Been Asking For Isn’t Such a Bad Purchase Afterall
Due to the historical performance of luxury goods during downturns, many analysts went as far as calling luxury brands recession-proof. During The Great Recession, the luxury goods market only fell by 9% before recovering quickly, while the S&P500 fell 48% from its local peak in Aug. 2008 to Mar. 2009.
While it’s hard to make a case for any industry being recession-proof, many believe it still is one of the more resilient industries to economic uncertainty. There was some healthy skepticism after the luxury market took several hits in 2023, a period experts considered a mild recession:
- WatchCharts' Overall Market index, an indicator of secondary market luxury watch trends, dropped 13.90% in 2023
- Farfetch, a luxury goods e-commerce platform, sold for $500MM to narrowly avoid bankruptcy, down from its peak valuation of $23Bn in 2021
- LVMH’s revenue growth slowed from 17% for both Q1 2023 and Q2 2023 to 9% in Q3 2023 versus the same period in 2022
Many media outlets chalked the slowdown in the luxury market to economic uncertainty, less disposable income, and changes in consumer preferences toward fast fashion.
But, the luxury market seems to be rebounding:
- LVMH reported 10% revenue growth in Q4 2023, a step up from Q3 2023 and ahead of analyst projections
- Cartier’s parent company, Richemont, reported Cartier sales in mainland China, Hong Kong and Macao grew by 25% in Q4 2023, per CNBC
- The latest Saks Luxury Pulse survey found luxury consumer optimism about the economy grew to 48% in Q1 2024, an increase of 12% from the previous survey in Q4 2023
Maybe some food for thought when your girlfriend asks you for that expensive purse.
