Bain & Company: "Global luxury goods market growing at 9% per year despite uncertain...

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Who we are Global luxury goods market growing at 9% per year

What we do despite uncertain signals; according to Bain &
Our clients Company's 6th annual 'luxury goods worldwide Email this article
market' study
Worldwide offices
Bain & Company press release 11/14/07 Printer ready version
For the media
Bain in the news
FOR IMMEDIATE RELEASE

Contact: Cheryl Krauss

Bain & Company
Telephone: +1 646 562 7863
cheryl.krauss@bain.com

GLOBAL LUXURY GOODS MARKET GROWING AT 9% PER

YEAR
DESPITE UNCERTAIN SIGNALS; ACCORDING TO BAIN &
COMPANY'S
6TH ANNUAL 'LUXURY GOODS WORLDWIDE MARKET'
STUDY

Europe Remains 'First Market' for Luxury, While Growth in

Asia Driven by
'Accessible' Luxury

New York, NY - November 14, 2007 - Bain & Company today

released the results of its 6th annual 'Luxury Goods Worldwide
Market' study and finds that sales of global luxury goods grew by
9% in 2006, up Euro 13Bn to Euro 159Bn. Europe continues to be
the 'first market' of luxury, contributing Euro 5,4 (or 42%) of the
Euro 13Bn growth in sales, which represented a 10% increase
over 2005. While representing only 11% of Euro 159Bn in 2006
sales, the luxury goods market in Asia-Pacific (excluding Japan)
grew by 18% over 2005 - a growth rate double that of the global
average. China led the way in Asia with 30% year-over-year
growth, followed by "young" India's 25% growth - and Taiwan,
Singapore and Korea all showed strong growth and fundamentals.

The annual study is commissioned by Altagamma, the Italian

association of Italian luxury goods companies (Editor's Note: Refer
to the boilerplates at the end of this release for more information
on Bain, Altagamma and the Luxury Goods Worldwide Market
study methodology).

Key Findings:

Total luxury goods market 2006 sales growth of 9% over

2005 equaled the percentage growth of 2005 sales over
2004 - which nearly doubled the 5% growth of 2004 over
2003 sales

Growth was spread across all major brands. Eighty-five

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percent of companies analyzed reported positive year-

over-year sales growth - the highest percentage recorded
since the inception of the study in 1999

Accessories (handbags, shoes, etc.) showed the strongest
product category growth with a 15% increase over 2005
sales growth, followed by apparel and hard luxury both
with 10% year-over-year growth

'Menswear' over-performed the market and continues to
gain a bigger share of the luxury goods market. Sales in
the U.S. and Europe generated 95% of the menswear
growth

The 9% year-over-year growth was less than the 11%
growth reported in the income statements by the 200
luxury goods companies in Bain's 'Luxury Goods Worldwide
Market Observatory' database. A key reason for the
discrepancy is emerging retail channel leadership, growing
13% over 2005, as compared with the 7% growth
achieved in wholesale market growth

Japan, which represents 13% of the Euro 159Bn luxury

goods market, grew at only 1% over 2005 primarily as a
result of a weaker currency and stagnating incomes in the
second half of 2006

"The luxury goods market outlook looks to remain strong through

2007," said Claudia D'Arpizio, a Bain & Company partner and
luxury goods expert based in Rome, and study author. "Bain
estimates overall luxury goods sales growth in 2007 to be in the
10-12% range over last year's performance, excluding any 'Super
Euro' currency impact and potential fallout from the sub-prime
mortgage crisis in the U.S."

The Three A's of Luxury

The study reveals luxury goods performance in terms of three

segments:

Absolute - characterized by elitism, heritage and

uniqueness, and represented by such brands as Harry
Winston and Hermes
 The luxury goods segment which fared best in
Japan, up 3% year-over-year

Aspirational - characterized by being recognizable and/or
distinctive, and represented by such brands as Gucci and
Louis Vuitton
 Represented largest rate of luxury goods growth in
U.S., up 11% in 2006 over 2005

Accessible - characterized by affordability, status and
membership, and represented by such brands as Coach
and Burberry
 Delivered a luxury goods growth rate of 22% in
Asia-Pacific (excluding Japan) - nearly 2.5-times
greater than the global average for 'accessible
luxury' sales growth
 Sales growth in Asia-Pacific driven by high degree
of entry level access to luxury goods

"While times are good, luxury goods companies can't afford to

coast along," added D'Arpizio. "Consumer winds can blow in a
different direction at a moment's notice, so companies must
continue to capitalize on existing market opportunities and seek
out new markets to exploit."

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Bain & Company: "Global luxury goods market growing at 9% per year despite uncertain... Page 3 of 3

To receive a copy of the 'Luxury Goods Worldwide Market' study

or to schedule an interview with Claudia D'Arpizio, please contact:
Cheryl Krauss, e-mail: cheryl.krauss@bain.com or ph:
646-562-7863 , or Frank Pinto, e-mail:
frank.pinto@bain.com or ph: 917-309-1065 .

###

About Bain & Company, Inc.

Bain & Company, a leading global business consulting firm, serves
clients on issues of strategy, operations, technology, organization
and mergers and acquisitions. The firm was founded in 1973 on
the principle that Bain consultants must measure their success by
their clients' financial results. Bain clients have outperformed the
stock market 4 to 1. With 37offices in 24 countries, Bain has
worked with over 3,600 major multinational, private equity and
other corporations across every economic sector. For more
information visit: www.bain.com.

About the Bain 'Luxury Goods Worldwide Market' Study

Bain & Company, in cooperation with Altagamma - the flagship
trade association for the Italian luxury goods industry - has
analyzed the market and financial performance of 200 of the
world's leading luxury goods companies and brands. The database
of companies, known as the 'Luxury Goods Worldwide Market
Observatory', has become a leading and much studied source for
the international luxury goods industry. Bain publishes its annual
findings in its 'Luxury Goods Worldwide Market' study, which was
first published in 2000.

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