Reuters Summit-Luxury sector will outperform in 2010-fund

(For other news from the Reuters Global Luxury Summit, click on
http://www.reuters.com/summit/GlobalLuxury10?pid=500)

* Swatch, Richemont, Louis Vuitton seen with most upside
* Watch sales to reach double-digit growth in 2010

* Chinese the biggest luxury spenders

By Antonella Ciancio and Pascale Denis

PARIS, June 1 (BestGrowthStock) – Watches and spirits are set for a
solid rebound this year, with LVMH (LVMH.PA: ), Swatch (UHR.VX: )
and Richemont (CFR.VX: ) top of the list of luxury stocks with the
biggest upside, Paris-based luxury fund SG Gestion said.

Isabelle Ardon, head of SG Gestion’s $31.5 million luxury
fund, said the sector would outperform the MSCI World index this
year thanks to strong demand from Chinese buyers, recovery in
the United States and the weaker euro.

Watches and spirits sales will also get a boost from
retailers rebuilding stocks after cutting them sharply in 2009,
the worst year on record for the luxury goods industry.

“Watches and spirits are the sectors we favour most because
they are expected to show nice growth this year”, Ardon said in
an interview at the Reuters Global Luxury Summit in Paris.

Shares in LVMH and Richemont have risen nearly 10 percent
since Jan. 1, while Swatch shares have gained 15 percent.

Watches are set for double-digit growth in 2010 after
dropping 22 percent in 2009, Ardon said.

Swatch Group, whose watch brands Omega, Breguet, Longines
and Tissot span a large price range, should benefit more
strongly from the recovery than Richemont, whose brands include
Cartier and IWC, she said.

Swatch is also more exposed to China than Richemont, she
added.

LVMH (LVMH.PA: ), the industry leader and the biggest luxury
holding of SG Gestion, is expected to benefit from the recovery
of cognac and champagne sales, hit hard by the downturn.

With a weak euro, it will also be easier to lift the prices
of some spirits in some countries abroad, she said.

LVMH’s revenue should also get a lift from Louis Vuitton,
regarded by consumers as a safer investment than other leather
goods brands because it never offers discounts and is always
seen as being in fashion.

CHINESE TOP LUXURY BUYERS

“There has been a polarisation of the market… The most
well-known brands have weathered the crisis best and have won
market share,” Ardon said.

As stock markets return to more normal levels, Ardon said
she was “quite optimistic” about the sector performance this
year.

“Luxury is likely to outperform the other sectors in 2010
compared with the MSCI World index and the MSCI Consumer
Discretionary (index),” she said.

The debt crisis in Europe is unlikely to affect demand in
the euro zone as the weaker single currency is likely to attract
shoppers, with Chinese visitors driving demand for luxury goods.

“The euro zone is a sizeable market, but today the growth
reserve is in the emerging countries, and particularly in China,
whose demand is pulling the entire sector. This is the reason
why we are not too worried about it,” Ardon said.

Chinese consumers have become the biggest luxury spenders,
accounting for about 25 percent of global sales, followed by
Americans, Europeans and Japanese, each accounting for around 20
percent of world demand.

“For the Chinese consumer, luxury is synonymous with Western
heritage. Today there are no big Chinese luxury brands, so there
are no competitors”, she said.
(For more on the Reuters Global Luxury Summit, see
[ID:LDE6500F5])

Stock Market Analysis

(Editing by Astrid Wendlandt and Louise Heavens)

Reuters Summit-Luxury sector will outperform in 2010-fund