Nothing but the best
By Holly Hubbard Preston Iinternational Herald Tribune

In the next eight weeks, the world's top fashion houses will be hitting the runways in New York, Paris and Milan with a vengeance, showcasing apparel and accessories for what could be the most challenging fashion season in a decade.

At a number of those shows, not far behind the loyal customers who rate front-row seats, equity research analysts will be sitting in the audience, sizing up the publicly traded houses in an effort to determine whether the industry has the legs to withstand a protracted economic slump. Particular focus will be on the small cadre of companies that sit at the top of the industry, the luxury-goods designers: iconic companies such as Gucci Group NV, Herm?s International SCA and LVMH Moet Hennessy Louis Vuitton SA, which over decades have built brand awareness and an elite and loyal customer base.

While an investor's inclination might be to write off the sector as too indulgent, a closer look suggests otherwise. While luxury-goods companies can be volatile, the best of them defy market cycles and develop ardent fans in the financial community.

And therein lies the challenge for investors: Amid all the hype, how to tell which is the best?

Investment houses are far from unanimous on what to buy, just as they disagree on whether now is the time to buy at all. Schroder Salomon Smith Barney said Nov. 8 that it had lowered estimates across the sector for 2002 and 2003 and had turned more bearish on it. “With war talks still very much on the agenda and U.S consumer confidence at a 13-year low," the firm said, "the outlook for the luxury-goods sector remains very uncertain.” Read on