PARIS (AFP) – Champagne corks are popping again in the luxury business as "It" bags and expensive watches this year sell like hotcakes from Beijing to New York, signalling the turning of a page after the global financial crisis.
As the owner of Gucci, Yves Saint Laurent and Puma -- French luxury goods giant PPR -- on Friday joined a string of high-end brands reporting ballooning 2010 profits, firms and consultants predicted rosy days ahead for luxury goods.
"The recession's starting to look like an old memory for the luxury industry," said analyst Matthew Curtin, quoted by Dow Jones Newswires.
PPR chief executive Fracois-Henri Pinault, whose son is married to film star Salma Hayek, said of the group's doubled first half net profits, "very good results ... in an economic environment that remains hesitant."
"There's a new perception of luxury, a more discreet sophisticated luxury where notions of heritage and craft play a big role," he added.
Asia has played a prime role in turning around luxury sector fortunes.
PPR's net profit in the first six months shot up 113.3 percent to 403 million euros (528 million dollars).
Earlier this week, the world's biggest luxury group, LVMH Moet Hennessy-Louis Vuitton, announced a 53-percent rise in net profit to 1.1 billion euros.
"We were expecting good results from LVMH but not that good. It was a good surprise," Isabelle Ardon, of specialist luxury investment fund SG Actions Luxe, told AFP.
While luxury goods sales slumped eight percent overall last year (though some big names weathered the storm), even smaller brands such as Hermes (22.8 percent sales increase), Burberry and the world's top high-end watch firm Luxottica are seeing burgeoning orders this year.
Specialist consultants Bain&Company said that last year's slide, first noted when Christmas sales crashed in the United States, had been offset by continuing demand from Asia, notably from China's growing monied class.
Worst hit last year were wines and spirits, as well as watches and jewellery.
But the Remy Cointreau champagne and cognac group was back in the black in the first quarter of 2010, with sales up 21.3 percent against a drop of 7.5 percent in 2009. And bottles of Laurent Perrier champagne are popping at pre-crisis levels again.
In Switzerland, watch exports gained 35 percent in June, largely due to a 40 percent hike in high-end watches.
Luxury supremos nonetheless remain quietly cautious, mindful of new tremors on the financial horizon.
LVMH chief Bernard Arnault offered no set forecast for the coming months but given the group's return to pre-crisis figures in all branches, he said he was "very confident" about the future.
Consultant Ardon said brands such as Louis Vuitton or Hermes that control distribution had sailed more calmly through the troubled waters of the crisis, while products such as champagne or watches, often sold by other retailers, had fared less well as these firms got rid of stocks.
"There was so much clearance of stocks in 2009 that in the end shipments of champagne were far below actual customer demand," she said.
This year's bounceback largely has Asia to thank. Hermes saw 45 percent sales to Asia, excepting Japan, while Burberry sold 43 percent of its goods to Asian buyers, bar Japan.
2010 also saw the return of US luxury buffs, with LVMH noting an 18 percent rise there and an 11 percent increase from Europe.
In Europe, sales are better due to the fall of the euro, the return of Asian and US tourists and new demand from European buyers, analysts said.
"There is continual sustained interest from China and the demand is for Europe-crafted goods, with luxury outlets opening constantly," said another anaylst.
"In the US last year it was not the done thing to buy luxury goods, it went against the grain to show off your money. Now a psychological barrier has been overcome."