Luxury Shoppers Shut Their Purses

(Businessweek) - Purveyors of luxury goods are finding that even their well-cushioned customers are feeling the economic pinch and putting their credit cards away

 

Luxury stores have finally caught the economy's cold.

For months, high-end retailers posted healthy sales increases, thumbing their noses at dismal reports of slumping home sales, risky mortgages, and rising energy prices. But now it looks as though even well-heeled consumers are pulling back. On Jan. 10, the upscale department store Nordstrom ( JWN) said that December sales at stores open at least a year fell 4% from last year, compared with an 8.7% increase in November. Saks (SKS), New York's Fifth Avenue luxury mainstay, also reported that its same-store sales were up a mere 0.8%, compared with a 25.7% increase in the previous month. And blue-blood retailer Neiman Marcus eked out a tepid 2.9% sales increase, vs. 5.8% in November and 8.5% in October.

"Everyone's shopping for the bare necessities, and people have stopped treating themselves," says Patricia Pao, founder of the Pao Principle, a New York retail consultant.

 

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