Luxury Stores Brace for Slowdown
The luxury goods industry is bracing for fallout from the global financial crisis.</br></br>Some companies, including jewelers' Tiffany & Co. and Bulgari SpA, are considering a brake on future store openings to reduce costs ahead of a likely sluggish holiday season. French fashion house Dior SA may close some boutiques in smaller U.S. cities.</br></br>Until recently, the world of luxury perfumes, leather goods, jewelry and designer clothing seemed impervious to the retail slowdown affecting apparel and home furnishings. Their resilience was due largely to growing business in emerging markets, such as China and Russia, which offset a slowdown in the U.S., Europe and Japan.</br></br>Now, the Chinese and Russian stock markets are faltering, putting pressure on their wealthy consumers and tugging on the luxury-goods sector's safety net.</br></br>"I'm not sure [emerging markets] are able to offset the weakness in other markets," Bulgari Chief Executive Francesco Trapani said in an interview. "Everyone is going to be affected." He estimated only 10% of new Bulgari store projects now would be approved, compared with about 50% earlier.