After seeing their retirement funds and home equity shrink severely, consumers tightened their belts in a shift some economists dubbed the New Frugality. Fortunately for the world’s largest latte purveyor and other peddlers of small luxuries, Americans have a short memory when it comes to the economy.
Affordable luxury goods like gourmet coffee, lingerie, and high-end skin cream have been enjoying a comeback since the stock market began to rally in August and higher-income Americans started feeling better about their finances.
At Estee Lauder Cos., whose brands include Clinique and MAC cosmetics, chief executive Fabrizio Freda says customers who traded down to drug store brands when times were tough are returning. Revenue was up 14 percent last quarter, driven by brisk sales of high-end moisturizers and eye creams.
Specialty items like the “Miraculous’’ push-up bra have helped the company that owns Victoria’s Secret and Bath and Body Works. Revenue rose 12 percent last quarter at Limited Brands Inc. as shoppers treated themselves to its stock in trade.
Trading back up has raised hopes for the holiday season. ShopperTrak bumped up its holiday sales growth forecast to 3.2 percent from 2.9 percent after a solid start in November.
