Citigroup Plutonomy Report, 2005, Excerpts
Our overall conclusion is that a
backlash against plutonomy is probable at some point. However, that point is
not now. As yet, there seems little political fight being born out on this
battleground. So long as economies continue
to grow, there is little threat to Plutonomy.
How do we make money from this
theme? If you believe, like us, that the Plutonomy exists, and you believe
there is no imminent threat to plutonomy, buy equities. There is however a more
refined way to play plutonomy, and this is to buy shares in the companies that
make the toys that the Plutonomists enjoy.
As the rich have been getting
richer, so too stocks associated with the rich, have performed exceptionally
well. If Plutonomy continues, which we think it will, if income inequality is
allowed to persist and widen, the plutonomy basket should continue to do very
well. Names in this basket that our analysts recommend as buys include Julius
Baer, Bulgari, Burberry, Richemont, Kuoni, and Toll Brothers.
The Plutonomy Basket: Stocks
That Leverage Plutonomy
1. Porsche - Auto
2. Dickson Concepts - Fashion
3. Beneteau - Yachting
4. Bulgari - Jewels
5. Burberry - Fashion
6. Coach -
Handbags
7. Hermes - Fashion
8. LVMH
– Louis Vuitton Fashion
9. Polo Ralph Lauren - Fashion
10. Richemont - Jewels
11. Rodriguez
14. Toll Brothers
– Luxury Homes
15. Wolford - Fashion
16. Four Seasons Hotels - Resorts
17. Kuoni - Travel
18. Mandarin Oriental – Luxury
Hotels
19. Shangri-La – Luxury Hotels
21. Sothebys – Art Auction
22. Julius Baer –
Private Banking
23. Vontobel – Private Banking
24. Tiffany - Jewels
Jewelry and cars
seized as Dutch trigger multi-country tax raids
31 Mar 2017
Dutch prosecutors say they have
launched co-ordinated raids in several countries against suspected
money-launderers and tax evaders. They are investigating about 3,800
Dutch-linked accounts in an unnamed Swiss bank following a tip-off they could
contain undeclared assets. Paintings, a gold bar, cash, a luxury car and
jewellery have been seized. As well as the Netherlands, there have been
searches in France, Germany, the UK and Australia. The Dutch government has
passed information to the other countries about more than 50,000 suspect
accounts at the bank. "The international reach of this investigation sends
a clear message that there is no hiding place for those seeking to evade
tax." The investigation will continue for weeks to come, Dutch financial
prosecutors said.
Hermes reports record annual profits
22 Mar 2017
Luxury goods group Hermes has
reported record profits for 2016, boosted by sales of its handbags. The French
company, best known for its £8,000 Birkin bags and £300 silk scarves, posted a
13% rise in profits to 1.1bn euros (£952m). The results hint at a wider
recovery in the luxury goods market. Last month, its French rival LVMH reported
record sales. Silk and textile sales,
which earlier in the year were affected by terror attacks in Europe and slowing
sales in China, picked up towards the end of 2016. They ended the year 1%
lower.
Luxury retailer LVMH sees revenues rise
12 Apr 2016
Luxury retailer LVMH saw a 4% gain
in revenue for the first quarter this year, compared with last year. Global
sales totaled $9.8bn for the three months to March. LVMH owns more than 60
luxury brands, including the Kenzo fashion line and the high-end watch labels
Bulgari and TAG Heuer. The company said the US market is strong, and Europe
remains well oriented except for France which is affected by a fall in tourism.
The Paris terror attacks in November last year led to a 50% drop at some store
sales. The retailer makes 10% of all its sales in France. The company's
headquarters is in Paris. The retail group used to enjoy double-digit sales
growth in China. The Chinese government last year imposed a strict clampdown on
luxury and ostentatious spending by government officials. That has led to a
decline in luxury goods sales across the industry in China.
Luxury brands Hermes and Burberry beat expectations
12 Nov 2015
Luxury brands Hermes and Burberry
have issued financial results that have beaten analysts' expectations. The
figures come at a challenging time for luxury brands in the key Asia-Pacific
region, including China. Last month, LVMH, the world's biggest luxury group,
said the summer stock market collapse in China had hit sales, particularly at
its flagship Louis Vuitton brand. Cosmetics giant L'Oreal has also warned that
demand for its luxury products has suffered a slowdown in Hong Kong and at
airports.
Rolls-Royce chief
admits sales hit by Chinese slowdown
08 Sep 2015
Rolls-Royce has admitted that sales
of its luxury cars have been hit by a fall in demand in China. Chinese buyers
have been affected by the slump in the stock market, slower growth and a
corruption clamp-down. Mr. Mueller-Oetvoes played down fears that recent events
in China would last long, forecasting that sales there would recover in the
next two years. "China has never been our number one market. Our number
one market is the United States and due to the fact we are properly balanced we
can cope with some of the downturn in China," he explained.
Luxury: Worth every penny?
24 Feb 2015
The growth of the global luxury
market has been astonishing, and continues that way, from a collective $247bn
five years ago, to $338bn (£224bn; €296bn) last year- a rise of some 36% -
according to market data specialists Euromonitor. Much of that demand had been
coming from Russia, China and other fast-growing countries. But slowing
development and Russia's political situation has put a dampener on that, says
Fflur Roberts, global luxury manager at Euromonito"Social unrest and
political conflict will have a major impact on what were fast-growing
markets." So, she says, developed markets will begin again to provide the
growth. And that growth is impressive. Euromonitor is forecasting spending on
luxury goods to be $463bn by 2019, an increase of 88% in 10 years.
The biggest luxury goods companies
by brand value:
Louis Vuitton $22.55bn
Gucci $10.39bn
Hermes $8.98bn
Cartier $7.45bn
Prada $5.98bn
Tiffany $5.94bn
Burberry $5.59bn
Ralph Lauren $4.98bn
Rolls-Royce breaks
sales record again in 2014
06 Jan 2015
Rolls-Royce Motor Cars sold a
record number of cars last year, breaking through the 4,000 mark for the first
time in its 111-year history. The luxury car maker sold 4,063 cars, up 12% on
last year, and marking the fifth consecutive year of record sales. Sales in the
US increased by almost a third, by 40% in Europe and in the Middle East by 20%,
the firm said.
Luxury carmaker
Bentley set for record sales in 2014
09 Jul 2014
Luxury carmaker Bentley has said it
is on course for record sales in 2014 after a 23% increase in deliveries in the
first half of the year. Bentley delivered 5,254 cars in the first six months of
2014, up from 4,279 cars in the first half of 2013. The firm's new Flying Spur
drove up sales by 61% in China, which saw more than a fifth of Bentley's
deliveries. Bentley's sales echoed rival Rolls-Royce, which saw a 33% boost in
sales in the half year to June. The Americas region, which includes North and
South America and the Caribbean, remained as Bentley's largest market, with
1,388 cars delivered. China followed, then Europe and the Middle East. A Flying
Spur typically sells for around £150,000, while a GT V8 sells for about
£130,000. Bentley is a subsidiary of Volkswagen, which also owns the Porshe and
Audi brands.
Rolls-Royce sees
record 33% boost in luxury car sales
08 Jul 2014
Engineering firm Rolls-Royce has
seen a record 33% rise in luxury car sales in the half year to June compared
with last year. Sales shifted up a gear to a total of 1,968 luxury cars
worldwide, the company said. Rolls-Royce cars can retail at around £350,000 for
top-of-the-range a Phantom model. Germany's BMW, which owns Rolls-Royce, saw
vehicles sales across the group rise almost 7% in the period. Sales were up in
Europe by more than 60%, and up in Asia Pacific by almost 40%, the company
said.
Burberry sees strong
revenue growth in Asia-Pacific
15 Jan 2014
Burberry, the UK luxury fashion
brand, has reported a strong rise in sales over the Christmas period. Revenue
rose 14% to £528m ($866m; 635m euros) for the third quarter to 31 December
2013, the company said. Burberry is famous for its red, black and camel checked
patterns. Outerwear, such as its trademark raincoats, and large leather goods
contributed about half of the growth, it said, while men's accessories and
tailoring "grew strongly". Burberry opened five new stores in the
period, including two in China and the first Burberry Beauty Box in Covent
Garden, London. The Asia-Pacific region delivered "double-digit comparable
sales growth", the company said, while other regions' growth was in single
figures. Its shares are up nearly 13% over the past year.
Jaguar Land Rover
posts record car sales figures
12 Jan 2014
Car maker Jaguar Land Rover has posted
record sales for 2013 with 425,000 cars sold worldwide. This was up almost a
fifth for the company. The figures came amid a resurgence in the wider vehicle
market as the economy recovers both in the UK and in many key markets overseas.
The Land Rover brand sold 350,000 vehicles worldwide last year, accounting for
over 80% of Jaguar Land Rover's total sales. Jaguar itself saw sales volumes
increase by 42% in 2013 as customers in the US, India and Germany bought its
luxury cars. Jaguar Land Rover is hiring nearly 2,000 extra people to meet
demand, bringing its total staff in the UK to more than 26,000. Volkswagen
announced last week that its luxury brands - Porsche, Audi and Bentley - had
achieved record sales in 2013, aided by demand for high-end cars in emerging
markets such as China and India.
Remy Cointreau hit by
China slowdown
26 Nov 2013
French spirits group Remy Cointreau
has said that its full-year operating profits will see a
"double-digit" decline after slower growth in China. It blamed the
fall on China's "sharp slowdown", together with an "uncertain
economic environment" in Europe. Meanwhile, German fashion house Hugo Boss
has said the slowdown in China is a "particular concern".
"Strong momentum" in the US and Europe failed to offset weakness in
China, the firm said, where distributors were still trying to run down high
stock levels. Sales of Remy Martin cognac fell 10% in the half-year to 327.2m
euros, mainly as a result of the problems in China. "A particular concern is China,"
Reuters reported chief executive Claus-Dietrich Lahrs as saying. "Compared
to what we were used to, the long period of low-hanging fruit, China came down
to a rather disappointing growth rate for the luxury industry in 2013."
Hermes profits
boosted by global luxury goods demand
30 Aug 2013
Luxury goods firm Hermes, famed for
its celebrity favorite, the Birkin bag, has reported a jump in profits. Net
profit jumped 14%, while sales increased by 11% for the first half of 2013,
compared with the same period last year. The group said that demand for silk
scarves had leapt. The Birkin bag, which is named after the actress and singer
Jane Birkin, has a starting price of £4,500. The record price for a Birkin was
set in 2011, when a red crocodile skin version sold for $200,000 (£129,000) at
an auction in Texas. It reported a 17% increase in demand from Asia, excluding
Japan. The company said that the Chinese market in particular continued to
"display great vitality". Despite continuing economic problems,
European sales were also robust, increasing by 14% outside France and 13% in
the company's native country.
Bentley's new luxury
car to create 1,000 jobs
23 Jul 2013
Bentley says the development of a
luxury car will result in 1,000 new jobs in the UK. The carmaker is investing
£800m at its headquarters in Crewe to develop and build the sports utility
vehicle (SUV), which will compete with cars like the Range Rover. Bentley's
owner, Volkswagen, considered making the car in Bratislava, Slovakia, where it
already builds SUVs. Chairman of Volkswagen Martin Winterkorn said:
"Together we will make this new Bentley another true Bentley - powerful,
exclusive and successful." It will be Bentley's fourth model joining the
Flying Spur, Continental GT and the Mulsanne.
Jaguar Land Rover
roars ahead to record £1.67bn prof
29 May 2013
Profits at Jaguar Land Rover have
roared to an all-time high. Total world sales at Jaguar Land Rover were up 22%
to almost 375,000 vehicles.
Jaguar Land Rover to
create 800 new jobs
14 Jan 2013
Jaguar Land Rover has announced the
creation of 800 production jobs at its plant in Solihull. The news came as the
firm announced record sales of almost 358,000 cars in 2012, up 30% from the
year before. The car-maker, which is owned by Tata of India, said vehicle sales
in China rose 70% to 71,940, overtaking the UK to become its biggest market.
Sales in the UK rose 19% to 68,333 and in the US by 11% to 55,675. The company
said it was active in 177 countries in the year. The Chinese market - where
sales of Jaguar Land Rover's vehicles have risen 80% in the past year - has
been rising in importance to the company.
Porsche breaks car
sales record in 2012
12 Dec 2012
German luxury carmaker Porsche has
said it has already beaten its annual record for most cars sold, last month
alone was up 39% on November 2011. Demand came from China and the US, where
there was 70% more demand for Porsches last month than in 2011. Premium
carmakers, such as Porsche and BMW, and budget manufacturers, such as Hyundai,
are doing relatively well. Indian-owned luxury carmaker Jaguar Land Rover said
on Wednesday that it sold 324,184 vehicles during the first 11 months of the
year, up 32% from the same period last year. But mid-market players - such as
Ford and General Motors' Opel and Vauxhall units - are having a torrid time,
suffering falling sales, profits and market shares.
Asia drives BMW to
record third quarter profit rise
06 Nov 2012
Booming sales in Asia have helped
German car firm BMW shrug off the gloom in Europe to report a record third
quarter pre-tax profit. The world's largest luxury carmaker saw sales in China
and Japan rise by 33% and 21.5% respectively in the nine months to the end of
September. In Europe, sales rose 2.6%. Overall BMW sales, including its Rolls
Royce and Mini brands, were up 9% to 434,963 for the three months to the end of
September.
Burberry confirms
weak China sales figures
11 Oct 2012
Burberry has confirmed that demand
in key growth market China slowed sharply. In early September, Burberry shares
slumped 19% after the company issued a surprise profit warning related to the
downturn in China. Worldwide sales in the last three months at comparable
stores open at least one year rose 1%, the firm said, compared with a 6% rate
in the previous three months. Business in Hong Kong, Germany and France
remained robust, Burberry said. The retailer said it continued to expand its
presence, with a 14% increase in floor space planned. In the last six months
Burberry opened 13 new mainline stores, including in Milan, Rome, Hong Kong and
London's Regent Street.
Ferrari sales and
profits surge to record highs
13 Sep 2012
Ferrari has reported record sales
and profits for the first six months of 2012. The company made 100m euros
($128m; £80m) net profit, up 10% on the same period a year earlier. Sales and
profits remain strong, so 2012 could be another record year. The carmaker has
enjoyed strong sales growth in new markets in Asia - China in particular, and
in Russia, the Middle East, and South America.
Jaguar boosts profits at Tata Motors parent
company.
09 Aug 2012
A 34% rise in sales by luxury carmaker Jaguar Land Rover (JLR) boosted
Indian parent company Tata Motors' profits during the April to June quarter.
JLR sales rose 34.4%, bolstered by
strong demand in Russia and China.
De Beers annual
profits jump 62%
10 Feb 2012
Diamond producer De Beers has announced
a surge in profits as Chinese and US shoppers snapped up its gems. Underlying
profits were up 62% last year to $698m (£443m). "All luxury goods appear
to be holding very well, and as a result, the luxury goods companies are
showing there is still strong demand," said Philippe Mellier, the
company's chief executive. The price of rough diamonds rose 29% last year. But
the firm warned that trading slowed down in the second half of 2011 and it says
that trend is likely to continue this year.
Rolls-Royce car sales
hit new record
09 Jan 2012
Sales at the BMW-owned luxury
marque grew by 31% from the previous year, although the growth rate was weaker than
in 2010 when sales jumped by 150%. Rolls-Royce's £165,000 Ghost model, which is
smaller and less ostentatious than the £235,000 Phantom models, has been the
main driving force for sales. The market for Rolls-Royce models grew
particularly fast in Germany and Russia, where sales more than doubled last
year. Sales in the Asia Pacific region rose 47%. In the UK they were up 30%,
while in the Middle East they rose 23%. The US and Chinese markets are the most
important ones for the company, though it has not released detailed figures
about how many cars it sold in individual markets.
Luxury carmaker
Bentley sees sales rise 37% in 2011
03 Jan 2012
Luxury carmaker Bentley has
reported a 37% rise in sales in 2011, saying demand has returned to
pre-recession levels. The US continues to be Bentley's number one market with
2,021 cars sold in 2011, an increase of 32%. However, China took second spot
with sales almost doubling to 1,839, surpassing the previous year's record.
December's figures were the best since Bentley's record year of 2007 and the
second best month in its history.
Tiffany profits rise showing strength of luxury sector
26 May 2011
The upmarket jeweler announced a profit of $81.1m (£48.5m) for the three
months to April, up from $64.4m a year earlier, and ahead of market forecasts.
Tiffany had previously said it expected sales in Japan to fall 15% during the
quarter following the March earthquake and tsunami. But while same-store sales
in Japan fell in March, they rebounded in April. The firm said all the stores
that had closed due to the earthquake had since reopened. Revenue grew in all
regions, with net sales worldwide climbing 20% to $761m. Looking ahead, the
company said it had "exciting plans" this year. It intends to open 19
new stores, introduce new products and increase spending on marketing and
advertising.
Euro
crisis boosts sales of luxury goods overseas
28 May 2010
Since November, the euro has lost a fifth of its value against the
dollar, a trend which boosts profits for companies which export to the US and
the Far East.And luxury goods companies, from watchmakers to dress designers,
which source their products in eurozone countries, have seen their costs fall
sharply and revenues rise. This week Britain's Burberry, famous for its classic
check-patterned accessories, said that profits for last year rose 23%.
Richemont, Swiss owner of the Cartier and Montblanc brands, saw April sales
rebound by 24% after a difficult year. Sales have also been rising for France's
Hermes and Italy's Prada.
