Despite Economic Woes, Luxe Timepieces Keep Ticking

With financial markets reeling, gold and diamond prices soaring and currency markets riding a dizzying seesaw, it would seem the time has come to turn bearish on luxury.

Still, as the industry navigates into the more uncertain landscape of 2008, there appear to be myriad challenges. The soaring price of gold, diamonds and other raw materials, on top of the value of the dollar, are among the hurdles.

Last month, Swatch Group, owner of brands including Omega and Breguet, tempered its enthusiasm for continued growth with a word of caution on currencies and raw material prices "creating new challenges."

Some analysts are beginning to raise flags, too.

"In a slowing environment, we believe the watch segment to be the most at risk in terms of momentum," HSBC luxury analysts Antoine Belge and Erwan Rambourg wrote in a recent report. "We do not expect a collapse in demand, but the slowdown of the category could be more spectacular, coming from a higher level."

For the moment, however, executives said meeting demand remained the biggest concern.

"We can't make enough," said Van Cleef & Arpels' worldwide ceo and president Stanislas de Quercize, who added that booming demand for more extraordinary pieces will push the jewelry house's average price points up by 50 percent this year.
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