Daily Management Review

Donald Trump's tax reform will help luxury brands


12/25/2017


According to analysts, luxury brands are winning from several circumstances, including the growth of world wealth, the rise of the stock market and tax reform in the US. Such support will be very helpful: to preserve the sales level, premium brands have already begun to offer discounts, despite the fact that such tactics can alienate many wealthy customers.



As noted in an interview with CNBC television director general of Telsey Advisory Group Dana Telsey, there are several circumstances that came together in favor of luxury retailers. Among them, she especially highlights expectations of tax reform in the US, which should reduce the tax burden, the growth of the stock market and world welfare. "I think that when consumers become richer, they spend more on luxury goods ... We see an upturn that affects everyone. This recovery helps all companies engaged in luxury goods," - said Mrs. Telsey.

The United States is the world's largest luxury market: according to Euromonitor International, sales of such brands in the US amount about $ 85 billion per year. Shares of many premium brands are really growing lately. So, shares of the jewelry company Tiffany grew by 10% in the last month. Shares of the manufacturer of clothes and accessories Michael Kors have risen this week by 2%.

At the same time, experts note that luxury retailers are increasingly turning to attracting customers with discounts. According to the estimates of the analytical company Edited, premium retailers made more discounts than ever before in this "Black Friday". Edited says that prices for more than a quarter of all luxury goods were reduced from 26% to 50%.

There are too much of premium brands, and their products are very similar. Some of them lowered prices without announcing it, because it could embarrass customers and devalue their brand, says consultant for luxury goods Milton Pedraza.

"While retailers offer aggressive discounts before Black Friday and Cyber Monday to stimulate consumers' spending, they want to be sure that they do not sacrifice profits in the long run," said Edited’s analyst Katie Smith. 

source: cnbc.com






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