The usually polished and aloof world of luxury retail has become an unusually tense and anxious place as some of its biggest names battle for survival.
French fashion house Christian Lacroix, famous for its bright colours, last week had to file for protection from its creditors.
It said that the global economic meltdown had hit sales of luxury goods and clothing and it had been unable to find a financing partner.
Meanwhile British luxury group Aquascutum failed to come back into British ownership after owner Renown rejected a management buyout led by chief executive Kim Winser, who promptly exited the company.
She has been touted as a possible successor to Versace chief executive Giancarlo Di Risio, who left the Milan-based fashion group after a reported boardroom spat.
Research firm Bernstein estimates that luxury sector sales will fall between 10 and 15 per cent this year. Ledbury Research director Marc Cohen said that recent events show the effect the global recession has had on the luxury sector, but added that this evidence has been growing for the past nine months.
Cohen said that the sector is continuing to be hit from two sides. “The top 1 per cent of the wealthiest people own the majority of stocks and shares.” As the value of these have shrunk so dramatically the downturn has had a far greater impact on the wealthy than the average person.
“Then there is the aspirational buyer, who buys Starbucks coffees and £800 Marc Jacobs handbags. They are also feeling the pinch as a lot of them worked in financial services. There has also been an attitudinal shift that this is not the time to be flash with your money,” Cohen explained.
Walpole deputy chairman Guy Salter said that the luxury companies now suffering are ones that had already had troubles. “The recession is bringing their troubles into stark focus.” For example, Christian Lacroix had been trying to raise money for a long time.
Salter believes that the world post-Lehman Brothers has not been as catastrophic as it could have been for luxury. He believes that one of luxury’s strongest growth markets, China, will kick back in before the end of this year. South Korea and Hong Kong are also relatively good markets.
Also, as Cohen points out, although the luxury sector is one of the most severely hit in a downturn, in a boom it enjoys some of the strongest growth.