U.S. Spending on Luxury Goods Slows as Global Financial Concerns Grow
Growing fears of an economic crisis in Europe has had a significant impact on the sales of luxury goods. “The environment is getting more difficult,” SpendingPulse vice president Michael McNamara said in a recent telephone interview. “It doesn’t seem that the wealth effect is enough to hold the sector up against economic headwinds.
MasterCard Advisors SpendingPulse has said that in the U.S. spending on luxury goods have decreased. Jewelry sales had the worst performance falling 3.7 percent in April. All other luxury sales climbed just 1.8 percent in April from a year earlier. Luxury sales in the first quarter had previously gained 6.7 percent, and 13 percent in the fourth quarter of 2011. Growth has been slowed as tourists have restrained from spending as a result of the stronger dollar and growing concerns of Europe’s economic troubles, McNamara said.
“In Europe, a softening macro environment toward the end of the first quarter and changes in our merchandising and assortment strategies across certain categories negatively impacted both our wholesale and retail sales in that region,” Fossil’s CFO Mike Kovar said in the company’s earnings release. The company’s 2012 earnings-per-share of $5.30-$5.40 fell short of analysts’ expectations of $5.56.
Coach, a leading marketer of modern classic American accessories, last month announced sales of $1.11 billion for its third fiscal quarter ended March 31, 2012, compared with $951 million reported in the same period of the prior year, an increase of 17 percent. The company also announced that its Board of Directors has voted to increase its cash dividend by 33%, raising it to an annual rate of $1.20 per share starting with the dividend to be paid to stockholders in July 2012.