Strength by Luxury Goods Shoppers in Asia and Online Bring Glimmers of Hope to Beleagured Industry, Says Bain & Company in Release of Annual Worldwide Market Study

Smaller Than Expected Decline Forecast for 2009; Positive Growth Predicted for
2010;

Full Recovery Not Expected Before 2011
MILAN--(Business Wire)--
Buoyed by a projected 12% year-over-year increase in sales in 2009 in mainland
China and 20% growth of sales online, the decline for the worldwide luxury goods
industry will be less than expected in 2009 and poised for 1% overall positive
sales growth in 2010; this is according to findings from the 8th edition of Bain
& Company`s annual `Luxury Goods Worldwide Market` study. Sales for 2009 are
projected to decline by 8% to €153 billion worldwide at current exchange rates,
a 20% downward revision versus the 10% year-over-year decline forecasted in
April. The authors find, however, that a full recovery will not occur until 2011
when the industry is expected to grow by 4.2% for the full year. Results of the
study were presented on Monday at Altagamma`s 2009 Osservatorio conference by
Claudia D`Arpizio, a Milan-based Bain & Company partner and widely-recognized
global luxury goods industry expert.

"Luxury goods markets are stabilizing," said Ms. D`Arpizio. "We are seeing less
discounting and mark-downs and more signs of increasing consumer confidence.
Growth will be timid in 2010 but it`s showing movement in the right direction."

Luxury sales in mature markets show continued softness. Bain predicts that 2009
sales will be down 16% in America, 10% in Japan and 8% in Europe versus 2008
levels. But 10% projected sales growth for luxury goods overall in Asia will
partially dull the impact of those declines.

Emerging markets will also see the greatest growth in new openings of
directly-operated stores (DOS). Of the 300 estimated store openings globally in
2009, 15% will be in mainland China, 25 % elsewhere in Asia, 30% in the Middle
East, and 15% in Eastern Europe and Central Asia. The remaining 15% will largely
come from so-called Tier 3 cities in the U.S. (e.g. Denver, Tucson) and the rest
of the world.

"Aspirational luxury shoppers in Asia and other emerging markets are fueling
sales growth in 2009," said Ms. D`Arpizio. "They remain bullish on brands."

Existing stores, conversely, have struggled, as brands absorb the full-year
effect of locations opened in 2008 (~750 stores) and as department stores
confront their own challenges. The study forecasts a 2009 decline of 4% in sales
at direct-operated luxury stores, compared to 11% declines in wholesale. Online
is proving to be a growth area, with a roughly 20% increase worldwide, but this
channel still accounts for less than 3% of total sales.

The study finds that declines are hitting product categories, though unevenly:

* Apparel sales will fall by 11% worldwide. In womenswear, many shoppers began
the year by "shopping their closets," deferring new purchases, and focusing on
more durable items with less fashion content. Men, too, deferred purchases for
more formal wear, while shifting their purchases to more casual items. For both
men and women, accessible brands have seen the strongest impact, as consumers
shifted to either discounts on higher-end brands or fast fashion alternatives.
* Jewelry, watches and other hard luxury items will be hit hardest in 2009, with
a forecast decline of 18%. These categories will feel an even deeper impact from
postponed purchases than apparel, with the additional pressure of "luxury shame"
depressing purchases of more ostentatious items.
* Leather, shoes and accessories will hold the line with a projected 1% decline.
These purchases represent more affordable ways for consumers to stay loyal to
their favorite luxury brands. Branded "it" bags from core leather goods brands
are seeing the strongest performance among bags, while shoes still allow women
to integrate less expensive fashion items into a mix-and-match look.
* Perfume and cosmetics are expected to fall by a more than anticipated 4% in
2009, especially as these products appeal to the broadest base of accessible
luxury shoppers. More cosmetics consumers this year expressed a willingness to
trade down to premium or sub-premium products. In fragrances, more brands
deferred new product launches.

Bain concluded the presentation with its prediction of 10 global luxury trends
for the coming decade starting in 2010:

1. Younger consumers and new groups such as working women will become the
dominant segments as baby boomers age and retire

2. Aspiration will evolve into new relationships with brands as consumers look
to fill different emotional needs with their luxury purchasing

3. Retail networks and product offerings will see greater and greater
customization by country and even by city-one size fits all has stopped working

4. Growth in China, South Asia and Central Asia may cause Asia to overtake
Europe and the Americas as the largest global luxury market region

5. Asia`s diversity (more than 15 countries, more than 300 cities, and more than
50 million consumers) will stretch luxury brands` marketing and supply chain
capabilities

6. Market pressures in a turbulent recovery will drive a second wave of luxury
consolidation

7. New luxury players will emerge as tastes and consumers change, including
brands based in emerging market companies

8. The luxury shopping experience will transform as direct-owned stores,
department stores and outlets look for ways to draw in the decade`s new luxury
shoppers

9. Online retail is still in its infancy, but quickly becoming more than a niche

10. Retailers will treat new shoppers as "in play," and offer competitive
products to those produced by typical luxury brands

"Luxury has been down, but it`s not out," concluded Ms. D`Arpizio. "The world of
luxury will see dramatic shifts in the decade ahead."

For a copy of the 8th edition of Bain`s Luxury Goods Worldwide Market study or
to schedule an interview with Claudia D`Arpizio, please contact Cheryl Krauss at
email: cheryl.krauss@bain.com or +1 646-562-7863, or Frank Pinto at email:
frank.pinto@bain.com or +1 917-309-1065.

About the Bain `Luxury Goods Worldwide Market` Study

Bain & Company, in cooperation with Altagamma - the flagship trade association
for the Italian luxury goods industry - has analyzed the market and financial
performance of 200 of the world`s leading luxury goods companies and brands. The
database of companies, known as the `Luxury Goods Worldwide Market Observatory,`
has become a leading and much studied source for the international luxury goods
industry. Bain publishes its annual findings in its `Luxury Goods Worldwide
Market` study, which was first published in 2000.

2010 Euro forecast in constant exchange rates. All other years are in current
exchange rates.

About Bain & Company, Inc.

Bain & Company, a leading global business consulting firm, serves clients on
issues of strategy, operations, technology, organization and mergers and
acquisitions. The firm was founded in 1973 on the principle that Bain
consultants must measure their success by their clients` financial results. Bain
clients have outperformed the stock market 4 to 1. With 41 offices in 27
countries, Bain has worked with over 4,150 major multinational, private equity
and other corporations across every economic sector. For more information visit:
www.bain.com.

Bain & Company
Cheryl Krauss, +1 646-562-7863
cheryl.krauss@bain.com

Copyright Business Wire 2009