Why Do Poor People 'Waste' Money On Luxury Goods?

We hates us some poor people. First, they insist on being poor when it is so easy to not be poor. They do things like buy expensive designer belts and $2500 luxury handbags.

To be fair, this isn't about Errol Louis. His is a belief held by many people, including lots of black people, poor people, formerly poor people, etc. It is, I suspect, an honest expression of incredulity. If you are poor, why do you spend money on useless status symbols like handbags and belts and clothes and shoes and televisions and cars?

My family is a classic black American migration family. We have rural Southern roots, moved north and almost all have returned. I grew up watching my great-grandmother, and later my grandmother and mother, use our minimal resources to help other people make ends meet. We were those good poors, the kind who live mostly within our means. We had a little luck when a male relative got extra military pay when they came home a paraplegic or used the VA to buy a Jim Walter house (pdf). If you were really blessed when a relative died with a paid up insurance policy you might be gifted a lump sum to buy the land that Jim Walters used as collateral to secure your home lease. Read more.

Richemont Says Luxury-Goods Maker Rules Out Selling Brands

The French maker of Brigitte Bardot purses isn’t for sale after its parent company studied strategic options, Chief Financial Officer Gary Saage said today on a call with reporters. Richemont can get better returns by investing in its current brands rather than disposing underperforming assets, the company decided after finishing a portfolio review, he said.

  

Johann Rupert, the South African billionaire who began a one-year sabbatical from his position as chairman in September, said in May that the Geneva-based company should have been quicker to cull bad investments. The departure of the head of Richemont’s fashion and leather-goods businesses earlier this year sparked speculation that parts of that business might be on the block after underperforming jewelry and watchmaking brands such as Cartier and Jaeger-LeCoultre. Read more.

Ruder Finn, Inc. and Ipsos Group Release 2014 China Luxury Forecast, Highlighting Emerging Trends in the Luxury Secto

The 2014 China Luxury Forecast was released by Ruder Finn, one of the world's largest independent communications agencies, and Ipsos Group, the third largest market research company in the world. According to the study, which analyzes luxury purchasing trends in China, consumers in mainland China and Hong Kong will stabilize their consumption of luxury goods over the course of 2014. 

The China Luxury Forecast also illustrates the sophisticated tastes and habits of Chinese consumers, as they are seeking more unique products, looking beyond the brand name, and expecting a higher level of professional services from sales staff, such as product knowledge and empathy towards consumer needs. Chinese consumers are also making more luxury purchases abroad and leveraging online and mobile channels to make purchases and learn more about luxury brands, as confidence in e-commerce is on the rise. Read more.

Michael Kors – Fashioning Profits

Michael Kors Holdings Limited (KORS) must have turned even the most bearish investors around with its second quarter earnings (for the fiscal year starting April 1). Its standout performance during the quarter was better than consensus estimates as well as its own guidance. Kors’ stock price rose 6% to $79 following the announcement, reaffirming Bidness Etc’s bullish stance on the stock.

The luxury lifestyle brand rang up net sales of $740 million for the quarter, compared to $532.9 million a year ago. The company has reported per share earnings of $0.71, higher than $0.49 in the year-earlier quarter. 

Investors should bear in mind that Michael Kors is usually conservative in its guidance, so its stock price has risen in the past despite lower EPS projections. Read more.

Luxury brands turn attention to Africa

Africa's growing middle class has expensive tastes and research by Bain & Company suggests that luxury goods sales will increase by 11% this year - demonstrating the continent's potential for upmarket goods.

Moreover, recent mineral discoveries have swayed the continent's fortunes and given rise to a band of super-wealthy individuals in Nigeria‚ Angola‚ Ghana‚ Mozambique and Kenya with expensive tastes.

Total luxury goods revenue in Africa is expected to reach €2bn this year from €1.5bn in 2011‚ according to Paris-based Bain's worldwide market study.Other luxury goods groups such as Cartier‚ Louis Vuitton‚ Burberry‚ Gucci‚ Fendi and Salvatore Ferragamo all have a presence on the continent. Read more.