You have heard me say on Fast Money that I think the Asian and
emerging market luxury consumer is taking this industry on an
extended joy ride that started in 2010.
[caption id="attachment_58154" align="alignright" width="300"]
Hong Kong shopping mall[/caption]
) is now largest luxury goods market in the world (followed by
Japan). This, is why Tiffany (
), Burberry Cartier, Chanel, Lancôme, Versace, LVMH etc. will see
China's luxury goods buyers are much younger than U.S. and EU
buyers thus the market will grow faster as a larger age group will
be buying for longer.
Over 80% of China's luxury goods buyers are under the age of 45
vs. 30% in U.S. and 20% in Japan. The fringe luxury goods market is
where there are more interesting and challenging projections to be
made as some of these brands are not as bulletproof as the
prestige, aspirational companies named above.
Companies like Coach (
), Michael Kors (
) are more vulnerable to economic cycles and changing tastes until
proven otherwise. Either way 2014 shapes up to be a solid
year for EPS growth and multiple expansions.
Consensus calls for global luxury goods sales to grow 10% and
EPS to expand 14.3% in 2014. Sales growth is projected 30 bps lower
vs. 2013, though EPS expectations are more bullish at 230 bps
higher. Bloomberg's earnings growth in jewelry and accessories is
expected to be highest on lower commodity costs and greater
operating margin inherent in these businesses.