British high-end clothier Burberry PLC reported that sales for its first six months of the year rose 30% on strong demand for its signature trenchcoats and accessories. The company noted that its revenue growth could slow down in the second half of the year, but attributed part of that to strong sales in the second half of last year. Does Burberry’s success point to a robust holiday season ahead for US luxury retailers?

High-end US retailers include Tiffany & Co. (NYSE: TIF), Saks Inc. (NYSE: SKS), the Bloomingdale’s stores owned by Macy’s Inc. (NYSE: M), Norstrom Inc. (NYSE: JWN), Polo Ralph Lauren Corp. (NYSE: RL), and Coach, Inc. (NYSE: COH). Same-store sales have been good at these retailers and the outlook for the third quarter for all has been very solid.

Tiffany doesn’t report monthly sales, but its second-quarter revenues were 24% higher year-over-year and same-store sales in the quarter rose 22%. Earnings rose 33% and the company posted adjusted EPS of $0.86, more than 20% higher than analysts expected. For the company’s fiscal year, which ends in January 2012, Tiffany expects a sales boost in the high-teens, a rise in operating margin of 1%, and an increase in EPS from a previously guided $3.45-$3.55 to $3.65-$3.75.

For Tiffany’s third quarter, analysts are expecting EPS of $0.60 on revenues of $806 million, rising to EPS of $1.64 on revenues of $1.27 billion in the fourth quarter. The third quarter revenue estimate is lower than the company’s second-quarter total. That is likely due to an expected drop in sales in emerging countries, particularly China, where growth in the sales of luxury goods is expected to fall as the country’s economy cools off.

Saks Fifth Avenue reported same-store sales growth of 9.3% in September and a two-month jump of 8.0%. For the year-to-date, Saks’ same-store sales are up 11.5%. For the current quarter, which ends this month, Saks is expected to post revenue of $698 million and EPS of $0.09. For its fourth quarter, expectations rise to EPS of $0.16 on revenue of $916 million.

Macy’s reported same-store sales rose 4.9% in September and said that sales for the third and fourth quarters would be at the high-end of guidance at 4%-4.5%. Analysts are forecasting that Macy’s third-quarter EPS will be  $0.16, rising to $1.66 in the fourth quarter. Revenue for the third quarter is forecast at $5.88 billion, rising to $8.6 billion in the fourth quarter.

Nordstrom’s same-store sales jumped 10.7% in September, more than double analysts’ expectations. Third-quarter revenue is expected to reach $2.34 billion with EPS of $0.57. In the fourth quarter, revenue is expected to rise to $3.1 billion and EPS is forecast at $1.11.

Ralph Lauren does not report monthly sales. The company’s revenues are nearly equally split between its retail stores and its wholesale and licensing businesses. For the third quarter, analysts are expecting EPS of $2.23 on revenue of $1.84 billion. For the fourth quarter, EPS is expected to reach $1.74 on revenue of $1.77 billion. Compared with the same periods a year ago, third-quarter EPS is expected to rise nearly 7%, while fourth-quarter EPS is expected to rise by just over 1%.

Coach reported fiscal year 2011 numbers in August, including a jump in same-store sales of 10.6% for the year. For its first fiscal quarter of 2012, the company is expected to post EPS of $0.70 on revenue of $1.02 billion. For the second quarter, ending in December, EPS is expected to reach $1.14 on sales of $1.42 billion.

According to a recent survey, consumers with discretionary incomes above $250,000 plan to spend about 7% more during this year’s holiday season. [http://www.jckonline.com/2011/10/10/only-richest-consumers-spending-more-this-holiday] Those with incomes between $100,000 and $250,000, however, are expecting to spend about 17% less. For those with incomes below $100,000, spending will fall by 28%.

Those with discretionary incomes above $100,000 who say they plan to spend less this year are not worried about the economy. They claim that they already have too much stuff.

At the other end of the spectrum, an indicator of expectations at the lower end of the income distribution is the number of containers arriving at US ports. The Port of Long Beach is expecting a 15% drop year-over-year from last September, and the number of containers coming into New York-New Jersey is only flat with last year.

Jewelry and high-end handbags don’t make up those shipments, but goods headed to Wal-Mart Stores Inc. (NYSE: WMT) do. That pretty well sums up the state of the US economy and this year’s outlook for holiday sales.

Paul Ausick

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