Posts Tagged ‘Hermes’
Monday, April 22nd, 2013
Posted by Leonard Steinberg on April 22nd, 2013
Uber-luxury goods conglomerate Hermes posted its slowest pace of quarterly growth since 2009 as currency headwinds weighed on revenues, reporting a 10% rise in sales to 856.8 million euros. Last year, growth for a number of high-end names cooled as shoppers, notably in China, moved away from more mass market luxury products and splashed out on pricier, more exclusive goods. Sameness on the very high end is a growing problem for a market seeking ultra-exclusivity in a world where the volume of extreme wealth is spreading. This trend seems to be replicating itself in New York real estate where the very high end is performing better than anything and the demand for ultra-ultra luxury remains very strong.
Hermes has been hit in recent months by unfavorable currency effects after receiving a boost from a weaker euro last year. LVMH Moet Hennessy Louis Vuitton Chief Executive Bernard Arnault raised a red flag earlier this year warning that “currency wars and competitive devaluation” could pose a risk. LVMH, which does more than 70% of its business outside of Europe, saw currency variations trim underlying sales’ growth in the first quarter, according to numbers released last week.
At constant currencies Hermes revenue climbed 13%, marking a slightly less stellar pace than in recent quarters though the figure is above the company’s medium-term target for annual sales growth of 10%, excluding exchange rate effects. Sales through the group’s own stores expanded briskly, rising 14% at constant exchange rates. Revenues from wholesale channels delivered “satisfactory” 10% growth, the company said.
Last week, U.K.-based Burberry showed signs of renewed health after a difficult 2012, as it said demand for higher-priced trench coats and leather bags had supported sales in recent months while LVMH reiterated plans to nudge its products further upmarket after it reported a 0.4% increase in sales at its fashion & leather goods division, home to its signature Louis Vuitton brand.
Tuesday, February 12th, 2013
Posted by Leonard Steinberg on February 11th, 2013
Hermes posted its 4th quarter results for 2012: the maker of uber-luxury, hyper-priced fashion goods and accessories showed sales increased 22%. Rolls-Royce has achieved its best sales in its 108-year history, with the world’s mega-rich buying up 3,575 Phantom and Ghost models during 2012. More evidence that the very wealthy are spending more and that there are more of them. The super-luxury Manhattan real estate buying frenzy that is taking place right now with rising prices further fuels my argument that the luxury market is experiencing inflation at a much higher rate than ‘regular inflation’……as the world’s economies grow producing more wealthy consumers, this trend is very likely to expand: What is luxury after all if EVERYONE can afford it?
Wednesday, January 2nd, 2013
Posted by Leonard Steinberg on January 3rd, 2013
Bloomberg reported that the worlds billionaire’s net worth surged in 2012, some by as much as twenty percent. Does this imply a sharp escalation in LUXOFLATION, our measure of the pricing inflation we have identified in the super luxury markets?
I think it’s very likely. Already we are witnessing clear evidence across the board where luxury real estate pricing across the globe has surged in the past 18 Months. The price of a Rolls Royce, Birkin bag from Hermes, Patek Phillipe watch, plush hotel room, high end restaurant tab, etc have all risen at a pace that certainly surpasses the average rate of general inflation. The huge dilemma facing the makers of luxury products is theirs maintain their exclusivity. Is an Hermes Kelly bag really such a luxury when you know THOUSANDS are being sold just like it all around the world? Does that elevated price alone make it so luxurious?
The ultimate luxury is one that has collector value, some element of rarity or scarcity about it. I always refer to “collector qualities” in Manhattan real estate…….that something that makes a property so unique it is difficult to replicate it…….or preferably impossible to replicate it. That will be the huge challenge for all luxury product creators moving forward as the audience for super luxury grows dramatically across the globe.
And yes, I anticipate massive pricing escalation over the next few years as some luxury makers and buyers will automatically believe something is luxury just because it has a high price. They may learn the hard way that this is simply not true. Then again, the world looks to the Kartrashians and the likes for style direction……
Tuesday, January 1st, 2013
Posted by Leonard Steinberg in January 1st, 2013
I am blogging from sunny Cape Town, South Africa……my place of birth and still possibly the most beautiful place anywhere…….and while far removed from the concrete jungle of Manhattan, I have learned many lessons, or have been reminded of some from the past……so here goes:
1) Beauty sells: Cape Town features exceptionally beautiful natural beauty in its topography and vegetation……but there are areas that have been developed where this beauty has been badly damaged. In the areas where a strong consideration has been made to structural esthetic standards and landscaping, not only is the quality of life much better, but the real estate values area considerably higher. Tourists flock toward at the beautiful parts too. Beauty is worth lots! So let’s keep planting those trees in Manhattan and build beautiful, interesting buildings too. If profit is the only driving force in New York, so be it……as long the end end result is beautiful. It’s just smart.
2) Security: we area extremely spoiled in Manhattan with the safety levels…..the same is not true in Cape Town, where even in the best neighborhoods, panic buttons, electrified fences, guard dogs, and a whole host of other security devices and procedures are part of daily life. In a country where the divisions between rich and poor are extreme, let us not ignore the fact that in the USA this divide keeps growing and the masses are not happy. While crime exists everywhere, South Africa’s crime is especially violent and life threatening, even in a robbery. The primary source of the worst criminals are organized illegal immigrants, may from Nigeria. They are a horrible drain on South Africa’s people…..of all races.
3) Politicians are trouble: we have seen our US politicians mess put the fiscal cliff negotiations amongst other numerous cataclysmic blunders……in South Africa the same is true where pandering and maneuvering always trump what is best for the country. Politicians mainly hurt economies and development. They are simply not practical.
4)Mayors rule! The mayor of Cape Town, Helen Zille, has delivered a small miracle in Cape Town…..just like our Mayor Bloomberg she is focused on practical solutions for the city’s problems. She invests in that which boosts the local economy. Smart, sensible, tough, tough on crime, fast…..a lot the adjectives usually not associated with most politicians. Politicians as managers simply get it!
5) Views are universal value adders: Many homes boast gorgeous water, Mountain, city or garden views in Cape Town……those with the most breathtaking views in Clifton, Bantry Bay, the City Bowl, Bishopscourt and Constantia have exceptional views and always command a premium. A huge premium.
6) Car culture. I am staying at a gorgeous home overlooking all of Cape Town and Table Mountain up on Signal Hill. While close to everything, you simply have Everywhere everywhere for everything. The gym is 9 minutes drive. That’s 18 minutes per day……or almost 2 hours driving per week if you work out frequently……that’s over 100 hours driving per year to go to the gym…..or a 4 day vacation. My point is that while life in a big city has its negatives, not relying on a car for everything can be a huge time saver and makes life much more productive.
7) Trash: a favorite topic of mine….. It seems that everywhere I go, whether St. Tropes, London or Cape Town, all cities have better, smarter, more aesthetically pleasing ways of housing and collecting garbage. Hence my photo above that shows how trash is neatly contained in containers on wheels…..wheeled to the garbage truck , connected to a hoist and thrown in the back of the truck. Why on earth is Manhattan so backwards in this area? It’s disgraceful that we have streets lined with garbage bags. I feel this may become my call to action!
8) Authenticity: as I observe cities across the globe, the globalization and sameness of design keeps getting worse. Developers and city planners take note: things that are unique to a city make that city special and noteworthy. Elements, materials, and details that are unique to an area, define that area. I am not talking about re-creating history or Disney-fication……..just good, intelligent design…..and it can be very innovative design too.
9) LUXOFLATION is the tax on the rich: while some parts of the world have become very angry towards the rich, wanting to raise their taxes relentlessly……and in many instances some me of rich have been abusive of the system paying ridiculously low, disparate taxes ……know that the rich pay a price regardless of the taxes they are paying……in South Africa the luxury taxes and import taxes are HUGE….my car would cost almost double here. In other parts of the world, the rich pay more than double for their Hermes Kelly bags than they did just a few years ago……they all pay MUCH more for travel, homes, clothing, travel, etc. LUXOFLATION is the new tax on the rich and these extra dollars fuel sales tax, and corporate profits that filter down to everyone’s pension funds…..
Monday, November 7th, 2011
Posted on November 7, 2011
So you thought the world’s luxury market was in trouble? Think again. French luxury group Hermes raised its full-year sales forecast on Friday after third-quarter growth beat its initial target, pulled by buoyant demand for the 174-year-old brand in Europe, the Americas and Asia.
The maker of 10,000-euro leather bags and 1-million-euro ($1.4 million) crocodile leather jackets said it expected full-year sales growth at constant exchange rates to reach 15-16 percent this year, against a previous forecast of 12-14 percent.
The upgrade was expected by many analysts, and some said the new forecast was still conservative. Hermes sales rose 18.2 percent at constant exchange rates to 683.2 million euros in the three months to Sept. 30, while analysts expected growth of 17 percent.
The upbeat outlook from Hermes comes after luxury peers such as Burberry , LVMH and PPR posted forecast-beating quarterly figures and said they saw no slowdown in spite of global economic concerns.
Of course, more middle class barnds have not fared as well. Abercromvie and Fitch and The Gap which are brands more reflective of lower income consumers have produced weaker results and discouraging outlooks. In November’s LUXURYLETTER, the monthly New York luxury real estate report produced by Leonard Steinberg and his team, it was the high end super-luxury properties that were reported to be seling best, even showing price escalations. Another reflection of how the world’s traditional 3 class system is drifting towards a 2 class system: rich and poor.
Sunday, August 14th, 2011
Posted by Leonard Steinberg on August 12th, 2011
As the political climate shifts to a more conservative stance, and the almost certainty that Rick Perry will be the next USA president, the super-wealthy will continue to seek out homes within communities that protect and separate them from the increasingly volatile outside world.
These gilded, gated communities are more obviously visible in Florida, California, Texas and Hawaii, usually featuring elegantly ornate gates with security protecting the inhabitants from the masses. In Manhattan, this country club mentality was taken to the extremes in picky co-ops such as Riverhouse, 740 Park Avenue and One Beekman where wealth alone does not secure entry. Now with buildings such as 15 Central Park West, The Time Warner Center and other high end condominiums, the old fashioned exclusionary co-op policies seem somewhat out of vogue, even though many of these buildings would probably love to institute stricter ‘admissions boards’ to keep out the riff-raff….lets face it, with the world celebrating and rewarding the likes of Snookie, wouldn’t it be nice to choose your neighbors?
The divide between the extremely wealthy and the poor will probably continue to grow. Those few individuals capable of amassing wealth through either extreme brilliance, hard work, luck or corruption, will want an environment that caters to their needs seamlessly. One Hyde Park in London is the perfect example of a building delivering that cocooned lifestyle becoming increasingly more desirable around the globe in major world centers……inclusive of bullet proof windows to keep the angry London rioters at bay?
I believe the trend to emerge out of this will be some gated community’ buildings that do not appear that way, where those living in them would be somewhat embarrassed to admit the need for the lifestyle. Because many people entering into this new wealth will have no clue about style or taste (think Snookie!) these buildings will have to deliver on every level, proposing a quality of life this buyer aspires to but would have no idea how to create: If Ralph Lifshitz could create the RALPH LAUREN uber-wasp lifestyle from A to Z, anything is possible! Security will be a growing concern, along with the staffing, swimming pool and high end gym. With the wealthy world fleeing towards quality in everything (Think the success of Hermes), the quality of these buildings from the design to the finishes to the construction to the mechanical systems will have to be of the very highest order, or they will fail.
Hundreds of apartments in this genre will be coming to the Manhattan market over the course of the next few months and years as the global economy grows (even though what is happening now is a bit scary, over the next 5 years we can be certain there will be growth). Developers who deliver an A-grade product will be handsomely rewarded. And those that deliver A-grade quality in a less obviously glitzy setting will attract the younger wealthy who don’t want to appear too ostentatious. In fact, the concept of a gated community is horrific to this buyer.
Maybe the Countess on Bravo’s The REAL Housewives of New York is wrong when she sings “Money can’t buy you class”? Leonard Steinberg sings: ”We will design, create and sell class”……for a price, of course!
Friday, March 18th, 2011
Posted by Leonard Steinberg on March 18, 2011
The number of millionaires is almost at the level of those in 2007 reports the Wall Street Journal to-day. Bidding wars are back. There is a shortage of un-affordable housing. Kelly bags are wait listed at Hermes. Manhattan luxury pricing is breaking some records on even some 2007 prices. New Construction is soaring and dormant buildings have been bought out or brought back to life. There is a war in the Middle East. The Dow is around 12,000.
Does this mean 2007 is really back?
Soon we will be referring to these times as ’2011′.
Wednesday, July 21st, 2010
In to-day’s New York Post, a story talks about the mounting evidence that there are two US economies operating side by side. They are correct.
While Main Street consumers struggle with high unemployment and mainstream retailers are forced to mark down merchandise to spark even mid-single digit sales gains, the luxury market is enjoying flush times — posting solid double-digit sales increases despite the high ticket prices.
For example, Hermes — whose luxury handbags frequently command price tags of $10,000 and up — said yesterday its sales surged a stronger-than-expected 27 percent during the first half of the year, with growing demand from super-rich shoppers in the US helping drive the results.
n June, Jaguar sales soared 53 percent and luxury hotel room rates rose 6 percent while Ford recorded sales gains of just 13 percent and economy hotel room rates slipped nearly 3 percent.
And while nationally the job picture remains bleak, the New York State Labor Department reported that the financial services sector added 2,600 Wall Street jobs in June.
At upscale Saks, sales are up 6 percent year-to-date — in line with upbeat reports this month from other luxury labels like Burberry and Armani – while more middle market JCPenney reported year-to-date sales gained just 1.6 percent.
And yesterday, Apple said quarterly sales at its upscale retail stores surged 73 percent to $2.58 billion, versus a first-quarter sales gain of 6.9 percent reported a month earlier by Best Buy.
Upscale shoppers also appear to be in the party mood.
“In the past week, we’ve sold more than five cases of Bordeaux priced at $12,000 each,” says Peter Morell, owner of Morell & Co., an upscale wine shop in Midtown. “For July, that’s pretty good.”
Sales at high-end retailer chains have soared 13 percent year-to-date, according to Customer Growth Partners. At the same time, sales at lower- and mid-price stores have risen by more modest single-digit percentages as most shoppers focus on basics.
That’s evidence that a gulf between the rich and the poor continues to widen, with the former mostly insulated from the economic headwinds that hamper the latter, says Craig Johnson, founder of the Customer Growth Partners, a Connecticut-based retail consultant.
“The high-end consumer is back this year, and it’s mainly a question of psychology,” Johnson says. “If they’re not spending, it’s because they’re simply not in the mood.”
While most shoppers weigh needs for clothing, electronics and groceries against weekly paychecks and health-care costs, luxury consumers’ spending habits can be affected most by emotions like guilt and shame.
The reality is we are seeing rather strong earnings this week….about 75% of companies are reporting good gains, and while they may not all be the double-digit-blowout gains a-la-Apple, they indicate a reasonably strong economy. Morgan Stanley, Goldman Sachs, Blackrock, etc are all doing rather well. With reduced staffing, and streamlined costs achieved in the depths of the recession, the bottom line always improves…..and those in power make more money, feel more confident and spend more. The two economies being discussed are also very relative to education levels. Unemployment in the USA is about 9.5%….yet amongst those with stronger education levels, college degrees, etc, unemployment is less than half that. This bodes well for Manhattan luxury real estate, a city that attracts the very talented and educated from around the USA and the world.