A lot of consumers are hurting right now, but you wouldn't know that looking at the earnings of major luxury companies.
Many luxury companies like LVMH Moet Hennessey Louis Vuitton SA (PINK: LVMHF), Burberry Group PLC (PINK: BURBY), Hermes International SCA (PINK: HESAF), and Coach Inc. (NYSE: COH) had a stronger-than-expected 2011 campaign.
Better still, they're set to expand on that success this year.
U.S. sales are regaining momentum and emerging markets – led by China – have been an outright boon for luxury companies.
Although you may not have realized it, China is now the world's second-largest market for luxury goods, behind Japan. And it could become the largest as soon as this year.
China's National Statistics Bureau says that there are now more people living in the country's towns and cities than in the countryside – making China a predominantly urban nation for the first time in history.
Worker pay is rapidly rising in China, with officially mandated base wage minimums up an average of 22% in 2011. And a new class of workers as well as a wealthy elite are driving luxury sales globally.
Two good examples of this are Burberry and Compagnie Financiere Richemont (PINK: CFRUY).
Luxuriating in Success
Burberry, the U.K's largest luxury-goods maker, reported third-quarter sales that beat analysts' estimates, and said it sees no reason to change full-year forecasts even in light of a "challenging" economy.
Burberry's revenue in the three months ended Dec. 31 climbed 22% to $882 million (574 million pounds). Asia-Pacific sales climbed 36%, while sales in Europe surged 20%. Sales rose 4% in the Americas and 31% in the rest of the world.
The company said it can weather any fallout from Europe's sovereign-debt crisis because Chinese consumers will help offset losses.
Chinese customers alone account for 10% of Burberry's total sales.
Swiss-based luxury goods group Compagnie Financiere Richemont also has benefited from China.