Luxury Industry Sends Mixed Signals With Record Earnings Alongside Bankruptcies.

Human beings are obsessed with status, and the need to have one-up on others is almost entirely responsible for the existence of the luxury goods industry.  We can wax lyrical all day long about how it's about quality, but overwhelmingly it's the inherent desire to feel better than others.  That's why luxury is so enduring, from the Sybarite community in Greece in 720 BC, to the modern day, it continues to thrive.

This is what makes luxury goods such an excellent recession marker, because while we may all love to show off, luxury is something that can fall by the wayside more easily.  It's annoying to not be able to afford a Birkin, but it's better to choose that than starve.  

However, while the Global economy is in considerable turmoil, with crypto, stocks, and property markets in decline, the luxury industry is sending very mixed signals.  Take for example, on the one hand we have Saks, which has filed for bankruptcy (read here), while on the other, the Richemont luxury goods group posted record earnings (read here).

These are certainly confusing factors, it my be the music starting to stop, and Saks feeling it more quickly given their retail presence, or it may just be that given a recent report from the World Bank that the top 10% of earners are not responsible for the majority of the economy.  Meaning that no matter how dire the world is for 90% of the population, consumers will keep consuming.  We don't have a view, but are interested to see how this plays out.