Profitability and Resilience of Luxury Market to the Financial Crisis during 2007-08

Abstract

The Financial crisis of 2007-08 has successfully hit the dollar value, developed economies and demand levels of multiple nations. The financers, capitalists and common man together decided to be conservative on spending. The economies kept calculating the means to survive out of it. In the troublesome circumstances of such, the market of luxury was reported to be growing at a fast pace. The ordinary of extraordinary people and the extraordinary of ordinary people is luxury. The study is to check the assertions made for the luxury market. The profitability level of the market is tested of the S&P Global Luxury Index that comprises of the 80companies. The data is collected from Bloomberg database, 2004-13. The data is categorized into two phases –pre (2004-06) and post (2009-13) crisis. The paired T-test is run over the data series of three profitability ratios- ROA, NPR and ROE.  The investors’ return on equity is not significantly hampered in the post phase in the market as well as the sector wise segregation. The tuff times of crisis have proved to bring diminishing values for net profit ratio in the Hotel, leisure and Beverages, Household and personal care sectors.