Luxury goods sales to grow despite crisis: report
MILAN (Reuters) - Although the global financial crisis is hurting sales, luxury goods companies should see sales and profit rise in 2008 and the next two years, albeit at a slower, single-digit pace, according to a Merrill Lynch report.
Sales will likely grow by 8 percent this year before slowing to a rate of 6 percent in 2009 and 2010, Paola Durante, head of corporate broking for Merrill Lynch in Italy, said in presenting the report at the Milan Global Fashion Summit, citing an average of estimates from analysts.
Durante said luxury goods sales in emerging markets were enjoying double-digit growth, while in Europe and the United States sales were seen rising in the single-digits.
Earnings before interest, tax, depreciation and amortization (EBITDA) were seen rising 5 percent this year and slowing to 2 percent next year. They would pick up to 8-9 percent in 2010, she said.
Durante said analysts had lowered the estimates they had made at the start of the year, when they had expected 12 percent sales growth for 2008 and 10 percent for the following year.
EBITDA had been forecast to rise more than 16 percent in 2008 and 14 percent in 2009.
"We can see there has been a cut in estimates but there are still expectations for growth even if at single-digit," she said.
"The estimates are still a bit high," she added, explaining how the 6 percent growth for 2009 (in sales) was based on a pick-up in the second half of the year.
The crisis has made itself felt in the luxury goods sector despite its usual resilience in hard times.
For example, Italian jeweler Bulgari has forecast a lower profit for the year and has refrained from giving an outlook for 2009 after the crisis knocked 44 percent off its third-quarter net profit.
(Reporting by Marie-Louise Gumuchian and Cristina Carlevaro; Editing by Jon Loades-Carter)
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