“I don’t think anybody really understands how high prices are going to go everywhere, in restaurants, in cars and everything,” Friedman said, adding that those increases will hurt all consumers and that companies like his are going to be in a “tricky space.”
Other companies that cater to wealthier consumers are also starting to warn that demand could be hit by all the worrisome headlines.
Larsson added that the company will “continue to navigate ongoing pandemic headwinds, particularly supply chain and logistics delays, especially in North America, in addition to the recent virus resurgences in Asia.”
But some Wall Street analysts are still optimistic that luxury companies will continue to do well.
“Luxury brands should outperform, as they will likely continue to have pricing power, which will keep margins elevated, and they could see a boost if international travel returns to pre-pandemic levels,” said Zachary Warring, an analyst with CFRA Research.
Worries about a major slowdown in the US could be overblown as well.
“We don’t buy the gloomy scenarios for luxury just yet,” Erwan Rambourg, global head of consumer and retail research at HSBC, said in a report last week. “We are surprised to hear some talk of dire sales decline scenarios in the US, given continued evidence of a good appetite for luxury brands.”
“The only market for which we expect moderation of growth to be a bit visible is mainland China,” Rambourg added, pointing out that Covid-related lockdowns could hurt luxury demand there.
But Rambourg also didn’t rule out the possibility of a global market and economic slump eventually hitting luxury sales. He said in the report that a recession, a sharper drop in stock prices and a prolonged conflict in Ukraine are the key risks facing high-end consumer companies.
Source : CNN