Luxury Makes a Comeback

So much for the new normal. Several high-end consumer discretionary firms have reported better than expected sales and increased earnings this past quarter, shattering the notion the consumer is dead. High-end Handbag maker Coach COH reported that its sales in the first quarter were up nearly 12% versus a year ago. Organic and natural foods superstore, Whole Foods Market WFMI stated similar results and luxury bell weather department store, Nordstrom’s JWN reported 17% sales growth, ahead of analysts projects. Combining this with March’s the increase in personal spending and you have a recipe for a return to the “old normal” Investors can play the return to personal spending by either betting on the firms previously listed in this article or using one of the several exchange traded funds in the area. The Consumer Discretionary Select Sector SPDR XLY follows a broad base of firms associated with peoples “wants”. For investors wanting to play just the luxury and big spenders returning to the economy, the Claymore/Robb Report Global Luxury ROB focuses strictly on the upper tier of consumer firms.