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Jay-Z's J Hotels Construction on Hold
Tweet Share on Facebook December 31, 2008 Comment (8)Hip-hop mogul Jay-Z has been stung by the recession. The hit maker sank money into J Hotels, acquiring a $66 million plot to build a luxury hotel in New York City. The purchase included the property plus air rights. Construction on the venture has been halted because of a serious lack of funding. One of Jay-Z's partners, Charles Blaichman, told the New York Times, "Even the banks who want to give us money can't."
Jay-Z also recently sold his Rocawear clothing line to Iconix Brand Group for over $200 million.
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New Year's Resolutions for the Luxury Market
Tweet Share on Facebook December 30, 2008 Comment (7)When wealthy consumers feel the need to conceal their lavish purchases in plain paper bags and avoid public shame by attending underground shopping parties, it's obvious that all is not well for the luxury goods and services market. Once considered well insulated from economic downturns, the luxury market has received a brutal beating this year, with sales plunging 34.5 percent over last year. Here are some ways the ailing industry can resuscitate itself and land firmly on its feet:
1. Reduce inventory.
Smart luxury brands should dramatically reduce their production, says Bob Schwartz, interim CEO of Portero, an online auction-based marketplace for luxury merchandise. "The smart luxury brands have this approach built into their DNA; they know scarcity and brand protection is value," says Schwartz. "Selling more is not success. The ones who floated up with the market don't have this in their DNA, nor do they have a lasting brand to stand behind . . . they will thrash around offering deals and wither away."
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Luxury Sales See Huge Declines This Holiday Season
Tweet Share on Facebook December 29, 2008 CommentDespite retailers' attempts to attract shoppers with deep discounts, the final week of holiday shopping was pretty much a bust. The culprits: a dismal economy coupled with poor weather, according to MasterCard's SpendingPulse 2008 Holiday Wrap-Up Report. Retailers' sales fell as much as 4 percent during the holiday season. "It's probably one of the most challenging holiday seasons we've ever had in modern times," said Michael McNamara, vice president of Research and Analysis at MasterCard Advisors.
The luxury category—jewelry in particular—had the biggest year-over-year declines, with sales down by more than 34 percent over last year, according to the SpendingPulse report. Excluding jewelry, luxury sales declined more than 21 percent, says the report.
I shopped around Georgetown last Tuesday for some last-minute gifts. I braced myself for crowds but saw very few shoppers for this time of year and navigated my way through each store effortlessly. How much shopping did you do in the past week—if any?
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Yankees Hit With $26.9 Million Luxury Tax
Tweet Share on Facebook December 23, 2008 Comment (1)Not only did the New York Yankees fail to make the playoffs this season, they've been slapped with a $26.9 million luxury tax by the commissioner's office. The luxury tax is to be paid by January 31.
According to Major League Baseball: "Having exceeded the payroll ceiling for several years, the Yankees were taxed at the compounded rate of 40 percent over the $155 million.
By comparison, the Tigers, the only other team hit with a luxury tax liability, surpassed the threshold for the first time and were taxed at a rate of 22.5 percent.
This newest assessment brings the Yankees' luxury tax total to $148.3 million in the six seasons since it was implemented. That figure represents 90 percent of the total paid into the kitty—with the only other contributions having been made by the Red Sox (a total of $13.9 million in four seasons) and the Angels ($927,000 in 2004).
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Luxury Hotels Offer Special Packages for Presidential Inauguration
Tweet Share on Facebook December 22, 2008 Comment (9)Between 4 million and 5 million visitors are expected to visit Washington during the four-day inaugural celebration next month. You may be one of the fortunate ones who've snagged accommodations at one of the area's best luxury hotels, which are offering special packages for the inauguration bash:
The Ritz-Carlton's Politically Correct Package: This package, priced at a cool $50,000, mixes luxury with philanthropy, which is a good thing if you're trying to justify spending that much dough during a recession. A portion of the proceeds will go to a charity of the guest's choice. For four nights, guests will stay in a luxury suite; have access to a 24-hour, on-call chauffeur in a luxury hybrid vehicle; be outfitted in a designer dress or luxury tuxedo courtesy of Saks Fifth Avenue; and receive a "Heart of the Nation" pendant, which retails for $8,000. More important, the package includes seating at the inaugural parade, two tickets to the official inaugural ball, and—my favorite—a private dinner for two specially prepared by chef Eric Ripert.
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Celebrities Donate Big Money for Inauguration Party
Tweet Share on Facebook December 19, 2008 Comment (7)I just received an invitation—to sign up—for tickets to attend the Virginia Inaugural Ball, featuring Gov. Tim Kaine, Sen. Jim Webb, and Sen.-elect Mark Warner. General admission tickets, which cost $200, are already sold out, but if I donate $10,000, I'll receive four tickets to the Blue Dominion Reception and six tickets to the Inaugural Ball. Don't think I'll be attending either.
But a slew of celebrities are sure to party with the prez. The Presidential Inaugural Committee today released its contributors list, which allows users to view, sort, and search real-time information on all donors who've contributed over $200 to the 2009 PIC. The committee says it doesn't accept individual contributions in excess of $50,000.
Some of the celebrities who donated $50,000 individually include: Jamie Foxx, Halle Berry, Ron Howard, Samuel Jackson, Sharon Stone, and Robert Zemeckis.
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Rich Pawn Their Belongings
Tweet Share on Facebook December 18, 2008 Comment (2)Pawnshops—loan companies that take items as collateral—have always gotten a bad rap. This stereotypical image often comes to mind: A seedy store stuffed with broken belongings in an unsafe area of town often catering to derelicts and criminals. But with the credit crunch, pawnshops are seeing renewed life. More cash-strapped Americans are pawning their belongings—from diamond rings and necklaces to iPods, televisions, and even boats. As a result, pawnshops across the country are seeing their businesses grow and are attracting a broader range of clients, including the well heeled.
From Reuters: " 'Banks aren't lending, so people are coming here for short-term loans against collateral like diamonds, watches, and other jewelry,' said Jordan Tabach-Bank, CEO of Beverly Loan Co, self-described 'pawnbroker to the stars.' . . . 'I do see my share of actors, writers, producers and directors,' he said, but also cited more visits from white-collar professionals and especially business owners struggling to meet payroll obligations . . . We still do the five-, six-figure loans to Beverly Hills socialites who want to get plastic surgery but never have we seen so many people in desperate need of funds to finance business enterprises,' he added."
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Louis Vuitton Cancels Tokyo Flagship Store
Tweet Share on Facebook December 17, 2008 Comment (3)The world's largest luxury goods conglomerate has been stung by the global economic slowdown. LVMH Moët Hennessy Louis Vuitton SA has abandoned its plans for a Louis Vuitton flagship store in Tokyo's Ginza shopping district, proving that even the strongest international luxury brands can't weather the downturn. The store was due for completion in 2010, said an official for the developer, Hulic Co.
Growing up in the '80s, I remember Japan being the most concentrated source of revenue for luxury brands. Louis Vuitton. Gucci. Hermes. It's a country that's always been renowned for its thirst for luxury goods. Japan has been a major market area for LVMH, which has 56 stores in the country. So I'm surprised by the company's latest announcement.
But at the same time, I'm not.
Japanese consumers are increasingly forgoing luxury brands for smaller-ticket items and trading down for designerlike goods at chain stores such as H&M and Zara. According to a luxury study by Bain & Co., Japan's luxury market, which is 12 percent of the global total, is already in a luxury goods recession and is expected to decline by 7 percent this year, vs. a 2 percent decline in 2007.
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Holiday Gift Guide: Luxury Edition
Tweet Share on Facebook December 16, 2008 Comment (4)There are only a few more days left until Christmas, and you may be among the 41 million consumers who haven't started their holiday shopping. According to the National Retail Federation's 2008 Holiday Consumer Intentions and Actions Survey, the average person had completed 47.1 percent of his or her holiday shopping by the second week of December, versus the 52.6 percent average completed by the same time last year. Only 8 percent of consumers say they have completely finished their shopping. If you're guilty of procrastinating with your holiday shopping—and money's no object—here are a few luxury gift ideas to consider.
Your niece is one stylish girl. This holiday season she can be a trendsetter in her Chuck Taylor All Star sequined sneakers. These spunky sneakers come in silver, blue, magenta, and black. $84.99.
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Kathleen Fuld: Shopping in Secret
Tweet Share on Facebook December 15, 2008 Comment (5)How does Kathleen Fuld, wife of former Lehman Brother's CEO Richard Fuld—who has been widely criticized for pushing Lehman Brothers into bankruptcy and creating a global financial panic—go about her holiday shopping? With discretion, says The Daily Beast.
"Last week, Kathleen Fuld stopped by the Hermès boutique on Manhattan's Madison Avenue to buy some holiday gifts. As she paid for her purchases, she vetoed the store's signature orange bag and asked for a plain white one instead.
It's become a common request, a Hermès employee told The Daily Beast. Sales associates at this temple of good taste have gotten used to passing out plain white shopping bags to clients eager to hide their $10,000 Birkin habits in the current economic environment."
The Daily Beast reports that Mrs. Fuld has been a regular client since the Lehman Brothers bankruptcy. She visited the boutique once a week and spent $5,000 or $10,000 each time.
