Sunday, November 16, 2008

Luxury Brands Lower Prices

It's a bold move and it's very hard to imagine but luxury brands are making a rare move and lowering prices. Yes, you heard correctly. Companies like, Chanel, Versace, Christian Louboutin and Chloé are reversing the industry's maxim that luxury prices only move up. The cuts range from 8% to 10% on most products sold in the U.S, according to the Wall Street Journal.



Don't think that the price move will cut into margins. The Journal points out that the price adjustment isn't likely to dent the profit margins of most European fashion houses because the value of the dollar has increased 28% against the euro since April. Most European luxury companies pay for their materials and labor in euros. The stronger dollar means these companies are earning more than they had budgeted on every handbag or piece of clothing sold in dollars.

The bold move may be applauded but who knows if it's enough to keep the cash flowing into extravagant purchases while the economy is severely crippled.

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