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In 2022, Champagne wishes and caviar dreams are coming true. Sales of expensive goods including diamonds, designer handbags, and watches soared over the holiday season, lifting profits for luxury brands, sales stats released Wednesday revealed.
Famous for its iconic plaid-lined trench coats, Burberry upgraded its profit forecast by about 25%, while at rival Richemont — owner of upmarket brands Cartier and Montblanc — revenue jumped 32%. Prada also turned in full-year receipts that were 3% ahead of expectations.
The Richemont Get Richer
Demand for high end goods is rebounding as vaccination rates lead to more mobility and socializing, but the companies benefitting from the upswing in sales can also thank the earlier stages of the pandemic. Consumers are now able to binge on things they otherwise could not afford because they saved up during lockdowns that deprived them of leisure activities, restaurant outings, and vacations. As people return to nights out on the town, they’re bringing diamonds as their best friend:
- Before the onset of the omicron variant — with vaccination rates up and people socializing more — sales of jewelry, fashion items, and timepieces rebounded above pre-pandemic levels.
- While sales on luxury goods were up worldwide, U.S. shoppers — typically responsible for half of the world’s diamond purchases — were particularly indulgent, with Richemont’s sales in America up 59% compared with the same quarter of 2019.
Crucially, buyers don’t seem inclined to wait for discounts to get their bling on. Full-price sales at Burberry, a cornerstone of the business, were up 15% year-over-year in the most recent quarter — and 26% over pre-pandemic levels.
Live Rich or Die Tryin: Rolls Royce CEO Torsten Müller-Otvös suggested earlier this month that the ultra wealthy, who have also spent heavily on fancy things during the pandemic, have done so because they have been overcome with a “better live now” mentality.
The Big Picture: While luxury sales are doing great, overall US retail sales in December fell 1.9%, the first time in four months sales didn’t increase.