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The dollar has recently strengthened slightly against the euro. On Friday, the dollar lost 1.6 percent against the euro ending at $1.24, compared with the previous day’s $1.22. Since the beginning of January, the dollar has gained against the euro by about 3 percent.
The weakness of the dollar has meant luxury goods companies have boosted some prices in recent months. Telsey estimates that prices by European brands were raised 8 to 12 percent in 2003.
Regardless of the price increases, though, the luxury segment continues to have a lot of momentum, Telsey said. Gil Harrison, chairman of Financo, agreed. “Just look at the same-store sales over the past two months,” Harrison said. “And the fact that retailers such as Neiman Marcus and Saks have made tremendous improvement in the months of January and February.”
Neiman’s same-store sales, reported Thursday, rose 24.4 percent in February over February 2003 and were up 12.8 percent in January. Saks Fifth Avenue has seen similar growth, with same-store sales up last month by 25.2 percent and by 10.9 percent in January.
Harrison, like other industry deal-makers and investment bankers, continues to hear that there is high demand for high-end goods. However, Harrison said there’s no question the price of luxury goods from France is being impacted — by at least 30 percent — from a stronger euro.
“What we are finding is that the price sensitivity is there and is expandable,” he quickly added. “Some of the companies have hedged their bets. The price differential is not evident for the time being. When that starts to change, though, is anyone’s guess.”
Harrison also noted a curious trend that is just beginning to develop in the segment. “Some of the luxury brands are trying to [have retailers] place their orders in units instead of dollars,” he said. “They’re trying to convince the open-to-buys to place orders based on units, and what they think unit increases will be. It’s a good omen for manufacturers.”