Holiday Central

Consumer, Credit "Concerns" At GS Conference


If you were looking for a sign of the times when it comes to the mood of the marketplace, my location today may be a fair indicator. It is the first day of Fashion Week and rather than being under the tents in Bryant Park, I am at the Goldman Sachs investor conference.

So far I've heard both Coach and Guess! say that all the noise about a consumer slowdown doesn't seem to be dissuading their customers from spending. Coach's CEO Lew Frankfort went so far as to say that the credit crisis has not been "felt at all" by the handbag company and Guess! CFO Carlos Alberini pretty much mimicked that sentiment.

Those two questions are the top concerns on Wall Street and the first two issues raised at this conference.

Both Coach and Guess! execs hit hard on the idea that accessories sell well right now as is typical during times of economic uncertainty and they indicated that they'll see opportunities in the high margin handbag business both in the U.S. and abroad. Why? Women are buying less clothing and more accessories these days. They're dressing around their existing wardrobe by updating outfits with jewelry (coach will be expanding its collection in January) and with handbags (the average woman owns 4 these days.)

The two companies seem to be countering each other though when it comes to strategy for expansion in the accessories market. While Coach emphasized jewelry and a wider selection of handbags as a way to expand, Guess! highlighted footwear numerous times as an area of expansion. This peaked my interest since the one area of accessories that is slowing down right now happens to be footwear, according to Goldman Sachs' analyst Margaret Mager. Should be interesting to see how this pans out for Guess! and a test of whether the analysts are on the money when it comes to anticipating product trends.

Still this could be a matter of two different customers: Coach's high end customer isn't hurting yet and Guess!'s 20 something buyer (average age 22) hasn't had his!/her allowance or discretionary spending cut just yet.

We'll keep you posted after our 2pm intv with Coach's CEO and then it is on to Fashion Week tonight!

Questions? Comments?