Russia luxury down with a bump in 2009

Mon Mar 30, 2009 12:13am EDT
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By Amie Ferris-Rotman and Maria Plis

MOSCOW (Reuters) - Kerchiefed women peddle fake designer handbags in front of the pitted Alexander McQueen and Stella McCartney stores, whose signs have been scratched off by hand less than 18 months after their grand openings.

The British designers' stilettos, diaphanous gowns and Italian-made wool coats were stuffed to the back of the adjoined stores and sold at a 70 percent discount before the financial crisis sealed their doors for good earlier this month.

The Russian capital, notorious worldwide for its exorbitantly priced restaurants, gridlocked traffic of sports utility vehicles and love of excess is taking a massive hit as recession bites in the world's fourth-largest luxury buyer.

Analysts say this year's profits will be slashed by around a third in the country's luxury clothes and accessories industry, which is estimated to be worth between $4.5 billion and $9 billion. Moscow buys over 80 percent of Russia's luxury goods.

The sudden sobriety is a far cry from just over a year ago, when Donatella Versace and Tom Ford jetted in to talk of their expansion plans in Russia to enthusiastic crowds.

Now Sweden's Hennes & Mauritz, famed for its low retail prices, is eyeing the very spot Alexander McQueen occupied, its chief executive Rolf Eriksen told Reuters earlier this month.

Russia's Crocus Group, which owns a palm tree-lined shopping center selling diamonds and limousines and around 100 luxury boutiques in Russia and Azerbaijan, is also feeling the pinch.

"In Moscow we have started to experience the slowdown and I must say it is substantial," its Baku-born commercial director Emin Agalarov said in an e-mail.   Continued...

<p>A woman sells handbags in front of the Alexander McQueen and Stella McCartney designer clothes stores in Moscow March 27, 2009. REUTERS/Thomas Peter</p>