Is Luxury Retail About To Finally Tank?

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From Ticonderoga, some interesting comments on retail right now: Early fall sales trends have shown little evidence that consumer purchasing behaviour has been negatively impacted by the volatility in the financial markets and the gridlock in Washington. However, August selling is a call to action, and once the back-to-school effect subsides we expect to have a better indication of expectations for fall/holiday selling. September sales results could provide the first hint. We are becoming increasingly bearish on the prospects for the luxury sector. These consumers generally are impacted more by their willingness to spend vs. their ability to spend. In 2008, the sharp drop in real estate and equity prices caused higher income households to pull back on spending. On our list we see Signet jewellers (SIG-rated NEUTRAL) as the most vulnerable to potential weakness in discretionary spending.

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