During Recession

According to the report from NetAdvantage, analysts tend to believe that the industry as a whole is still be affected by the economic crisis in general. The report also pointed out that although the US economy has officially been in recovery sine June 2009, the consumers’ confidences remain weak because of the high employment rate. However, the report also points out that the high-income class is feeling positive about the future and, it is an important indicator because this would lead consumers out of prior recessions.

The recession affected most companies domestic companies in a negative way. However, there are other raising economies which have been less affected by the recession, so multinational companies have been less affected by the recession.

Among those multinational companies, luxury brands like LVMH Moet Hennessy are having an easier time because of the other economies that are less affected by the financial crisis such as China and Japan. According to the article “LVMH’s Net Income for Year Soars 73%” from New York Times, the net income of LVNH 2010 surged 73 percent to $4.1 billion. The article also states that “demand from the newly affluent, especially in Asia, is driving much of the rebound in the luxury industry after overall sales slumped around 8 percent in 2009.” Which also suggests that luxury brand is a very good investment opportunity.

Among those stats, it is clear that companies’ revenue related to their supply elasticity. Most companies which have inelasticity supplies will do better even during recession.