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To: Return to Sender who wrote (12042)	10/13/2003 1:37:58 AM
From: StanX Long	Respond to of 95385

Recovery of Luxury Sector Glimpsed Sat Oct 11, 8:07 AM ET Add Business - Reuters to My Yahoo! story.news.yahoo.com By Jane Barrett MILAN (Reuters) - Luxury goods sales are starting to recover after two years of turmoil, but while some companies pop champagne corks, other players disagree on how solid the pick-up will be while the euro is strong and tourism is still weak. Luxury sales sank in early 2003 when confidence and tourism were ravaged by war in Iraq (news - web sites) and the deadly SARS (news - web sites) epidemic. But since July, shoppers have sauntered back to label-lined streets around the world, fueling hopes the worst is over. "It's been a most extraordinary time from the September 11 (2001) attacks to wars, recession, huge companies like Worldcom going bankrupt and taking savings with them and, to top it all off, SARS," said Santo Versace, head of his family's fashion house. "But we've come through it, and in August and September we had 12 percent growth. If you don't call that a turnaround, I don't know what is," said Versace, who sells everything from porcelain plates to six-figure fur coats. The story is similar at Gucci, which expects to keep up August's double-digit sales growth for the rest of 2003 thanks to a pick-up in tourism. Meanwhile, luxury titan LVMH and the nippy new Burberry are expected to post like-for-like growth of five percent for the third quarter. "(Italian fashion) had a vile first half, but things are really bouncing back and we should end 2003 down only two percent on last year," said Mario Boselli, head of Italy's Fashion Chamber. "Next year should see a double-digit rise." But while some CEOs rub their hands in glee, others warn it is too early to sound the all-clear. "The fact there's no war looming right now and no odd virus killing people makes us think we're back to normal but consumers are very fragile. We only need one shock to send us reeling again," said Luigi Maramotti, chairman of the Max Mara empire. EURO WOES It is impossible to prepare for shocks like SARS -- the respiratory disease that killed more than 800 people this year and kept shoppers off Asia's streets -- and there are still plenty of other pitfalls possible in future. "The major thorn in luxury's side is the strength of the euro against the yen and dollar," said luxury consultant Carlo Pambianco, who said sales needed to pick up for another two months before he would call a market recovery. The euro has risen 20 percent against the dollar and six percent against the yen in the last year, gnawing at the value of sales in other currencies and making euro-priced goods more costly to import or to buy with dollars or yen. Sales at Giorgio Armani rose 1.5 percent in the first half excluding forex swings, but fell five percent in euro terms. Japanese tourists have long been luxury's lifeblood, buying expensive presents in countries where prices can be 40 percent lower than at home, and industry watchers said a slow pick-up in travel was holding back growth, especially in Europe. "Things are getting better, but the Japanese tend to plan their holidays six to nine months in advance, so it will be a while before the recovery really seeps through," said Claire Kent, a luxury goods analyst at Morgan Stanley. As money starts to ring back into upmarket tills, consumers are hunting for interesting new gems to buy such as this summer's multi-colored Louis Vuitton logo bags, Ken said. "You have to keep focused on creativity, but the customer also wants quality and the experience of shopping," said Sidney Toledano, CEO of Christian Dior. "For those people managing the whole process and their brand well, these are exciting days."