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ISSN: 1649-3877

Listed by: Cabells and EBSCO

Frequency: 1 online Volume per year

Are Luxury Brands Really a Financial Dream?

JSME Vol 7: Issue 4, 2011

Author(s): Jean-Noël Kapferer (Pernod Ricard Chair on the Management of Prestige Brands, HEC Paris, France) and Olivier Tabatoni (Institut d’Administration des Entreprises, Aix en Provence, France)

Abstract:
Luxury attractiveness, some people even talk of cult of luxury, is a mark of our times. Far from being limited to the happy few, luxury brands are now the dream of many consumers throughout the world. Are luxury brands also a financial dream? Do the luxury groups justify their attractiveness, as measured by their high stock market valuation multiples? Data from luxury groups’ published financial accounts show that their financial performance is not exceptional on all criteria. What then fuels their financial attractiveness? Is it the halo of prestige of their brands? The analysis suggests that market expectations are influenced by the performance of the best luxury companies and groups. Also, within the luxury groups while some show remarkable results many brands are experiencing difficulties. It is these exceptions which sustain the dream of the sector. Finally, to achieve further success, individual luxury brand companies will have to join groups in the future, something which would strongly boost market expectations.

Keywords: luxury, brands, financial performance, brand equity, strategy

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