The news has sparked an increase in the share prices of several other luxury brands. Antony Gold, head of the retail sector at international law firm Eversheds, comments:
“The proposed taking by LVMH of a stake in Hermes is indicative of an interesting feature of the retail market; namely that many retailers of luxury goods have done surprisingly well in the downturn.
“At first, this may seem counter-intuitive - it might be thought that luxury goods, by their very nature, are among the first items to go when cash starts to get in short supply. Some reasons why this expectation does not seem to have been borne out in practice will of course be retailer-specific. However, in general, buyers of luxury goods tend to have a higher disposable income which does not contract so sharply as that of consumers in some other sub-sectors of retail. Furthermore luxury goods manufacturers and retailers tend to be very adept at building strong brands which are not easily replaced by less expensive items. Both of which factors leave them well placed to weather the downturn.”
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