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Avoiding the Bumps: No Slowdown Ahead For Booming Luxury

The luxury engine just keeps purring and industry executives and analysts haven't been this upbeat about the upscale market since the Nineties.

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Socol said accessories and shoes have been particularly strong, though men's and women's are good, too, and there's a better balance in the Barneys business overall.

"The other thing is that the designers are really showing fashion that's fashion right," said Socol, adding that there's a willingness to spend more. He said shoppers who used to spend $100 on jeans are now willing to pay $200, while handbag customers who spent $500 to $750 are now willing to pay $1,000 to $1,500 for a bag.

Reed Krakoff, Coach's president and executive creative director, said "people continue to be needing things that are unique and exciting. And the reason that luxury continues to be successful is because there is good product out there right now that is generating that excitement."

Sidney Toledano, president and ceo of Christian Dior, which saw July and August sales vault 16 percent, said robust sales continued across all categories in early September as consumers went for more expensive items, such as its diamond-studded Christal watches. Most of the gains for the second half will be within Dior's network of some 184 stores, but Toledano said plans call for more locations in fast-growing America and the first India location, in New Delhi, before the end of the year.

Severin Wunderman, owner of Corum watches, said this has been one of his best years ever, as business in the first half grew 40 percent over last year. "It's from sales of much more expensive pieces, not in units, but in price, with a lot of gold," he said, adding the Middle East and Russia were driving sales.

"In the Middle East, the price of oil is high and they are recycling the money by buying luxury," Wunderman said. "Russians — the world's nouveau riche — are really spending. They have become the best clients for watches."

Françoise Montenay, president of Chanel SA, used the term "booming" to describe the company's business in China and the U.S., where ready-to-wear sales are up 18 percent for the first eight months of the year.

"Our fabrics are very light. We have worked very, very hard on getting lightweight tweeds and they are very successful," she said. "We are also selling a lot of eveningwear. When the economy is booming, people are going out more and there are more parties."
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