Luxury Institute News

March 17, 2014

Wall Street Shares Wealth, for Better or Worse

By: Martha C. White
NBC News
March 15, 2014

The $26.7 billion in bonuses that Wall Street hauled in last year will help fill city and state tax coffers, and certainly boost retailers when bankers sport Patek Phillipe wristwatches and slip into Maseratis. But all that green is a double-edged sword for New York City.

Wall Street bonuses grew by 15 percent in 2013, to an average of $164,530, according to the New York State Comptroller’s office. Milton Pedraza, CEO of research firm the Luxury Institute, estimated that Wall Streeters spend between half and three-quarters of their bonuses, then save or invest the rest, and about half the amount they spend is funneled into the local economy.

Because they spend an incredible amount of money in their jobs, “I think that spills over in their personal life,” said David Friedman, president of research and consulting company Wealth-X.

Click the link to read the entire article: http://www.nbcnews.com/business/economy/wall-street-shares-wealth-better-or-worse-n53071

January 11, 2014

Tiffany results signal caution among luxury shoppers

By Jonathan Berr
CBS News
January 10, 2014

Shares of Tiffany & Co., whose name has been synonymous with luxury since before the Civil War, fell Friday after the second-largest luxury retailer said its earnings would be less than analysts had expected.

The New York-based company expects to earn $3.65 to $3.75 per share in the fiscal year ended January 31. While that forecast is unchanged from a previous forecast, it was below the $3.79 that analysts surveyed by Bloomberg News had forecast.

This is the latest sign of the uneven performance of many retailers during the holiday season despite the improving performance of the U.S. consumers. Wealthy consumers appear to be less enthused about buying goods and services than many experts predicted.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.cbsnews.com/news/tiffany-results-signal-caution-among-luxury-shoppers/

Spread the wealth, share!

December 25, 2013

Post-Twitter IPO: “Suddenly everyone thinks you’re Santa Claus”

By Mark Garrisson
Marketplace
December 24, 2013

Twitter may be the most famous company to go public this year, but 2013 was a monster year for IPOs in general.

And initial public offerings can bring big money to employees, on paper at least. Things can get a little awkward this time of year for the newly-rich, as certain friends and family members raise their holiday gift expectations. Strike it rich with an IPO, and suddenly everyone thinks you’re Santa Claus.

“You find you have relatives and friends you never knew you had,” says Doug Wolford, president and COO of Convergent Wealth Advisors. “I’ve known people whose friends have, you know, asked them to pay off their cars, take them on trips to the Super Bowl, you name it.”

Pressure to spend big is intense and not all external.

“The individuals themselves begin to feel guilty, feel like they do have to step in and solve a lot of the problems for the people they love. So it’s kind of a two-sided issue” says Luxury Institute CEO Milton Pedraza.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.marketplace.org/topics/tech/post-twitter-ipo-suddenly-everyone-thinks-you%E2%80%99re-santa-claus

October 16, 2013

Top Earners Recover Their Losses, and Then Some

By Annie Lowery
New York Times
October 15, 2013

FOR most Americans, the economy over the last 10 years has felt like a slog interrupted by a punch: the recession came amid years of stagnation. But for America’s top earners, the experience has been more like whiplash: a boom followed by a bust followed by a boom.

Call it the 1 percent boomerang. The country’s top earners lost huge sums during the recession, as housing values plummeted and the stock market crashed. But the recovery has restored those fortunes — and then some, for some people — and created tremendous new ones.

The trend starts with the merely quite well-off, households earning more than about $150,000 a year. And the sums become more exaggerated higher up the income scale.

Click the link to read the entire article which includes multiple quotes from Milton Pedraza, CEO of Luxury Institute: http://www.nytimes.com/2013/10/16/your-money/top-earners-recover-their-losses-and-then-some.html

 

September 17, 2013

Regional Banks And Wells Fargo Deliver Winning Customer Experiences

(NEW YORK) September 17, 2013 – The Luxury Institute’s new survey asked wealthy U.S. clients with a minimum household income of $250,000 to rate multiple aspects of their primary bank from a list of national and regional banks.

Evaluations of convenience, staff, company principles, and products and services yield a composite Banking Customer Experience Index of 1-10. Wells Fargo stands out with the highest composite score and also leads in each of the four sub-indices.

Smaller banks beat out Bank of America and Chase for having knowledgeable, trustworthy and respectful staff. Bank of America earns the lowest overall score but still holds the biggest market share of high-income clients. Chase consistently ranks between Bank of America and Wells Fargo and has the second largest market share of all rated consumer banks.

Despite shortcomings of bigger banks, Bank of America, Chase, Wells Fargo and Citi Bank customers are far more likely (45% vs. 27%) to open a new account with their existing bank as compared to current customers of smaller banks.

“There is an opportunity for big banks to bridge the customer experience gap between themselves and their smaller competitors by focusing on developing a unique Customer Culture to deliver value for all segments of customers, and especially the top customers who deliver most of the profits,” says Luxury Institute CEO Milton Pedraza.

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

September 5, 2013

Ferragamo CEO Quells Buyout Talk as Growth Surges in U.S., China

By Andrew Roberts
Bloomberg
September 4, 2013

Salvatore Ferragamo SpA (SFER) Chief Executive Officer Michele Norsa quashed speculation of a buyout, saying the luxury shoemaker has the financial resources to fund expansion as growth accelerates in China and North America.

“I don’t see any reason” for a sale, Norsa said today in an interview on Bloomberg Surveillance with Tom Keene. A 2011 initial public offering gave financial freedom to members of the Ferragamo family, and the Florence, Italy-based company is generating greater-than-expected free cash flow, he said.

“If you become big enough you can survive alone,” Norsa said.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:
http://www.bloomberg.com/news/print/2013-09-04/ferragamo-ceo-quells-buyout-talk-as-growth-surges-in-u-s-china.html

July 22, 2013

Are These “Artsy” Picks Safe From e-Tailers?

By Arturo Cuevas
The Motley Fool: To Educate, Amuse, and Enrich
July 19, 2013

Investing in art and jewelry just might be too capital-intensive and/or too speculative for the average retail investor. The practical option here perhaps would be to invest in companies catering to the luxury or high-end markets like Sotheby’s or Tiffany & Co.. The U.S. economic recovery may be not as robust as many would wish, but certainly the recent fundamental strengths it exhibited, such as gains in employment and the rise in disposable incomes, augur well for these equities’ respectively iconic fine arts and jewelry.

Both companies are established brand franchises. Sotheby’s has been pounding its gavel in auction sales in global centers, while also enticing retail consumers internationally for more than two and a half centuries. The same is true for Tiffany, established 1837, whose blue box provides delight through its 115 stores across the globe, and strong online presence.

Robust stand vs. marauding Amazons

While these ladies constitute only a small segment, their preference as consumers provides an indication that the high-end domains of Tiffany and Sotheby’s are unlikely to be successfully invaded by mass market e-tailers like Amazon (NASDAQ:AMZN). After having established a beachhead in wines recently, Amazon is now reportedly hot on the comeback trail in selling fine arts through tie-ups with galleries, a venture it tried but abandoned years back with Sotheby’s.

The element that Amazon obviously lacks is what Luxury Institute CEO Milton Pedraza calls “relationship selling,” which when cultivated enough, can help bolster sales in both size and frequency. A majority of the elite patrons of Tiffany, for instance, appreciate handwritten thank-you notes from the jeweler’s salespersons they deal with.

When emotions rule

Such an emotional experience can be equated with the “theatrical performance,” which one

My take, therefore, is that the forays of Amazon and its ilk in taking e-tailing into high-end market, are unlikely to shake the foundations of Tiffany and Sotheby’s as investment possibilities. Those artsy investors who may even be thinking of having Amazon as an alternative pick with its reported ambitions to rejoin the art circle, are likely to be turned off by the current “nosebleed valuation” of this equity. It trades at a forward one-year P/E around the mid-90s, which seems like betting heavily on the works of a fledgling artist.

Looking more attractive, Tiffany has a forward one-year P/E ratio that barely touches the 20s, The jeweler also had an appreciable 2013 first quarter with its worldwide sales rising 9% and net profit gaining 3%. With faster growth in Asia and lower-price silver jewelry as the main primers, it expects 6-8% sales growth for this year, a pace that Wall Street sees as a return to more robust gains for the company. Notably, Tiffany is adding 14 company-operated stores this year; seven in Asia-Pacific, six in the Americas, and three in Europe.

Although Sotheby’s 2013 first quarter was a bit rougher, its one-year P/E valuation close to 18 appears inviting. For the most recent quarter the auctioneer had a 3% drop in revenues to $101.7 million, despite an increase in auction sales. Its auction commission margins, which trended lower for the quarter, have been strengthened recently to help in revenue improvement.

Conclusion: Ready for the challenge

As a final take, Sotheby’s looks ready to fend off any incursion of e-tailers like Amazon on its turf by adopting the same technological tools wielded against it. Company chairman, president and CEO Bill Ruprecht said Sotheby’s is “continuing to redefine and personalize the company’s client experience.” These initiatives, he said, include the delivery of web-based tools so that company clients across the globe can engage Sotheby’s “anywhere, at any time on any device” and access private sales shows be it in New York, London, Hong Kong, or China and elsewhere.

http://beta.fool.com/darttanyan001/2013/07/19/are-these-artsy-picks-safe-from-e-tailers/40604/

May 8, 2013

Neiman Marcus sale could build more customer-focused brand

By Danielle Abril
Dallas Business Journal
May 7, 2013

While private equity investors of Neiman Marcus Group Inc. consider their exit strategy, a luxury retail expert predicts a move that could result in an increased emphasis on customer relations.

Milton Pedraza, CEO of The Luxury Institute LLC, said he belives that the next logical step for Dallas-based Neiman Marcus is to go public. The move would allow Neiman Marcus the freedom to focus on building relationships with its consumers.

“Neiman will have a very solid structure if they go public,” Pedraza said. “It will be customer-centric rather than shareholder-centric.”

Bloomberg reported earlier this week that TPG Capital and Warburg Pincus LLC, Neiman Marcus’ private equity investors, were considering selling the company or taking it public. The firms held their investment for eight years, 60 percent longer than the norm, according to Bloomberg.

Neiman Marcus declined to comment.

Neiman Marcus could take four different directions, according to Randall Ray, partner with Munck Wilson Mandala LLP. Ray has spent almost 25 years dealing with corporate legal matters and said one thing is clear in this situation: TPG and Warburg will choose the path that ends with the highest profit for them in the least amount of time.

The four options, according to Ray, are: filing an initial public offering, selling to a private equity firm, selling to a strategic buyer and choosing a dividend recapitalization.

Pedraza said it was “less likely” that the firms would sell to another private equity firm.

“It would take a very special private equity firm to do the things Neiman Marcus needs,” he said. “You need patient money to rebuild the brand.”

Pedraza cites online retailers Amazon and Zappos as companies that have benefited from answering solely to the consumer. He also said that other retailers, such as Nordstrom and Michael Kors, have been successful in their transformations to becoming publicly owned.

Pedraza also said the recovering economic climate offers an opportunity for TPG and Warburg Pincus to sell to the general public.

“It’s a good time to go public,” he said, adding that a booming economy would offer the best conditions for the move. Whatever road Neiman Marcus chooses, there will be few clues as to its direction until the transaction is complete.

“Unless Neiman Marcus feels compelled to make this information public, there won’t be a lot of transparency in the process,” Pedraza said.

http://www.bizjournals.com/dallas/news/2013/05/07/sale-of-neiman-marcus-could-impact.html

May 2, 2013

Pentamillionaire Investors Reveal Whether 34 Top Firms Are Worth What They’re Paid To Watch Their Portfolios

(NEW YORK) May 2, 2013 – Affluent U.S. investors with at least $5 million in assets and $200,000 minimum annual income rate 34 national financial services firms in the Luxury Institute’s 2013 Luxury Brand Status Index (LBSI) wealth management survey. Wealthy individuals share opinions on each firm’s quality, exclusivity, social status and overall client experience.

Only 30% of firms achieved an overall LBSI score of 5.0 out of a possible 10.0, suggesting significant dissatisfaction from high-net worth investors with their wealth management providers. Brown Brothers Harriman earned the highest LBSI of 5.87.

“Especially in wealthy management, client relationships and trust can take years to cultivate and a short period to deteriorate,” says Luxury Institute CEO Milton Pedraza. “Smart firms need to listen to what wealthy individuals are telling them to maintain brand reputation and client loyalty.”

Respondents ranked the following 34 wealth management firms, listed alphabetically:

  • Ameriprise Financial
  • Bank of America
  • Barclays Wealth Management
  • BB&T Wealth Management
  • Bernstein Global Wealth Management
  • Bessemer Trust
  • BMO Harris Private Banking
  • BNY Mellon Wealth Management
  • Boston Private Bank and Trust
  • Brown Brothers Harriman
  • Charles Schwab
  • Citi Private Bank
  • Credit Suisse Private Banking
  • Deutsche Asset & Wealth Management
  • Deutsche Bank Alex. Brown
  • Fidelity Investments
  • Fifth Third Private Bank
  • Goldman Sachs
  • HSBC Private Bank
  • J.P. Morgan Private Bank
  • J.P. Morgan Private Wealth Management
  • Merrill Lynch
  • Merrill Lynch Private Banking & Investment Group
  • Morgan Stanley Smith Barney Wealth Management
  • Neuberger Berman
  • Northern Trust
  • PNC Wealth Management
  • SunTrust Private Wealth Management
  • U.S. Bank Private Client Group
  • U.S. Trust
  • UBS Private Wealth Management
  • Vanguard Personal Investors
  • Wells Fargo Private Bank
  • Wilmington Trust Wealth Advisory Services

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

 

November 8, 2012

Industry experts project affluent spending habits based on election results

By Mathew Evins
Evins Communications
November 7, 2012

Do you think that Barack Obama’s re-election will have a major effect on affluent consumers’ day-to-day spending? Long-term spending?

I do not think the re-election of Obama will have a direct effect on the affluent consumer’s day-to-day spending in the near term.

If it causes a major downturn in the stock market, this will have a slightly negative impact on the spending of the affluent, especially for holiday gifts.
As for the general public, they are not likely to change their spending because of his re-election. The larger influence on spending will be the actions taken, or not taken, to avoid the “fiscal cliff”, i.e. the increase in taxes and the major reductions in government spending due to take effect in January.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute:
http://evins.com/aperture/?p=499

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