Jun 8, 2009
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Luxury sales will grow in 2011

Jun 8, 2009

LONDON (Reuters) - Global sales of luxury goods will likely fall again in 2010 but return to growth in 2011, an industry expert said on Monday 8 June.

"The worst thing that can happen is that we have another year of negative growth in 2010 ... But I see it picking up definitely by 2011," said Scilla Huang Sun, who runs a $30 million luxury fund for Julius Baer.

Speaking at the Reuters Global Luxury Summit in London, she forecast global sales of luxury goods would fall 5 percent to 10 percent this year but said suggestions the economic crisis meant the death of the luxury market were way off the mark.

"I don't think it's dead because I think human nature will always be attracted to nice product and nice brands," she said. "The question is when will it be back to the level we saw in 2007."

Market valuations for European luxury goods companies, which stood at 12 to 16 times earnings in 2007, have been languishing at multiples of eight to 11 for several months now.

Huang Sun reckons stocks are cheap on a long-term basis.

"If you look at the long-term charts, where we are even after the (recent) rally, we are still nowhere compared to where we were in 2006, 2007," she said.

The winners that emerge from the economic crisis will be "the big and beautiful brands, strong brands and well managed brands and the classic brands," she said, offering Burberry Group Plc (BRBY.L) as an example.

(Reporting by James Davey; editing by John Wallace)

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