(Changes second paragraph to make clear GNP growth drop is in
percentage points, not percentage)
By Phil Wahba
June 5 Global sales of luxury goods should rise
7 percent a year through 2014, buoyed by a still-growing Chinese
market and barring any major economic crises, Boston Consulting
Group forecast on Tuesday.
Under a worst-case scenario, defined by BCG as a 1.5
percentage point drop in gross domestic product growth i n
Western Europe, the United States and Japan, and slowing growth
in emerging markets like China and Brazil, sales would rise only
3 percent a year.
Luxury sales have boomed in the last two years, recovering
from the 2008 global financial panic. But stock markets around
the world have swooned since April because of the euro zone
crisis, a stalled U.S. recovery and signs of more modest
economic growth in China, casting a cloud over the sector.
Upscale jeweler Tiffany & Co last month lowered its
annual sales forecast because of the turmoil, while Saks Inc's
chief executive told investors last week that a
sustained drop in the stock market, or international tourism,
could affect the U.S. luxury department store's business.
"If there are (fewer millionaires), and if there is a big
slowdown in China or Brazil, this will impact the sector for
sure," said Jean-Marc Bellaiche, a BCG senior partner who heads
the firm's luxury practice.
Growth in so-called experiential luxury, such as adventure
travel, spas and hotels will outpace growth of goods such as
watches and designer gowns, BCG projected.
One example of a luxury company riding that growth is LVMH's
upscale Cheval Blanc five-star hotel franchise. It is
expected to have a total of four locations by year-end.
Sales of this segment of luxury should rise 12 percent per
year until 2014, BCG said.
Despite the dark clouds over luxury, the growth of the
middle class in emerging markets like China, Brazil and Russia
will be a boon for the global luxury market.
"The reservoir for growth still exists," Bellaiche said.
(Reporting by Phil Wahba in New York; editing by Matthew Lewis)