In times where it is politically incorrect to show off luxury, consumers are starting to behave in a way where it is ethical to spend less, which has translated into lackluster performance within the luxury exchange traded fund (ETF).
It has been nearly 20 years since a recession has affected luxury-good sales with companies such as Bulgari, Burberry, Cartier, Montblanc, and other top designers remodeling their traditional focus on exorbitance and accoutrements of wealth, reports Nelson D. Scwhartz for The New York Times.
Remember the ’90s, when sales of luxury good exploded along with the wealthy well-dressed elites? It was a time that transformed chic addresses such as Fifth Avenue, Bond Street and Champs-Élysées in to shopping utopias for the upper-middle class.
Reality has finally caught up with this industry. It is expected that luxury goods may drop 3% to 7% in 2009, the first time an annual sales decrease has been recorded since the early ’90s.
The struggles facing these retailers may not bode too well for the luxury goods ETF, Claymore/Robb Report Global Luxury (ROB), which is currently down 57.5% year-to-date. It’s one of the worst performers in the retail sector. Bulgari is 1.5%; Hermes is 7.1%; Coach is 4.8% and Christian Dior is 3.6%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.