No end of luxury

摘要

The terrorist attacks on September nth 2001 reverberated even in the world of fashion. Department stores cancelled their spring-collection orders, the spring 2002 New York Fashion Week was cancelled for the first time ever, and LVMH'S net income for the 2001 financial year plummeted from EUD722m in 2000 to just EUD10m. After a recovery in late 2002, misfortune struck again in 2003: war in Iraq, the SARS epidemic in Asia and a persistently sluggish economy in Japan. Tourists around the world are responsible for around a quarter of the world's luxury purchases, so anything that lessens international travel hurts the industry. Yet this apparent vulnerability to world events is actually a sign of strength. The world of luxury is truly global, with all the commercial opportunities that implies: as people get richer, they spend proportionately less on necessities and more on luxuries. This has long been true in Japan, whose fashion-conscious people account for a quarter of the world's luxury-goods sales. That is why corporate analysts anxiously examine the state of the Japanese economy: any change will have an effect on the share prices and sales of luxury-goods houses. And because most Japanese prefer to buy their luxury goods abroad (where prices are up to 40% lower than at home), any change in the value of the yen against the dollar and euro matters too.