For every industry, there are benchmarks because they give you a reasonable snapshot of what is going on. The benchmarks allow you to formulate a theory and other data allows you to determine if the theory is good. If the theory is good, you can make decisions to do something or nothing and sometimes doing nothing is a good thing. A benchmark in the countries which consumers led the economy is how are luxury sales doing?

In an article by Mimosa Spencer and Dominique Patton of Reuters, French luxury giant LVMH reported a 3% fall in 3rd quarter sales.

The world’s largest luxury group generated $28.6 billion in revenue for the 3 months ending in September, a 3% fall on organic growth. The consensus was 2% growth cited by Barclays.

Fashion and leather goods comprise about half of LVMH revenue and 3/4’s of its recurring profit. The group is home to brands such as Louis Vuitton and Dior reported a sales decline of 5%.

In Asia, excluding Japan, of which China is the main market, the sales decline was a 16% slide from a 14% drop in the prior quarter. In Japan, growth slowed to 20% from a 57% jump the previous quarter.

Linking to dividend paying stocks, those that tend to shop for luxury goods tend to have the highest disposable income, if they are shopping less, then either the economy is not doing as well or they are preserving the income for something else because they expect the economy not to do as well in the future. This is why benchmarks are wonderful snippets, but they need further information to determine if the theory is correct, doing your homework is required.

There are more questions than answers, till the next time – to raising questions.