eThesis - Kauppakorkeakoulun sähköiset gradut

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The purpose of the study was to examine the operational performance of luxury goods companies during the financial crisis of 2008 and the following recession. In addition, the study aims to provide insights on the relatively unstudied industry of luxury goods. The operational performance of luxury goods companies is further evaluated by comparing their key financial performance indicators against a benchmark group consisting of premium goods companies in order to find whether the luxury goods companies show outperformance during the recession. A regression analysis is conducted to gain further insight on the factors that potentially affect the results.

The sample consists of a hand-collected data set of 20 publicly traded global luxury goods companies and a peer group of 20 public premium goods companies also operating globally. For the purposes of this study, the luxury goods industry is limited to the so- called personal luxury goods or luxury consumer goods. The financial data is gathered from Thomson One Banker and the companies financial statements, covering a time period from year-end 2007 to year-end 2010, covering the full economic down cycle: slowdown, recession and rebound.

The main findings of this study support the set hypotheses regarding luxury goods companies' performance during the financial crisis and the following economic downturn. While luxury goods companies were not found to be immune to the recession, their performance was on aggregate positive despite the hostile operating environment. In addition, the positive performance was significantly better when compared to the peer group, which suggests that luxury goods companies indeed outperform their premium peers. Finally, the variables contributing to this performance were measured with sales growth, financial flexibility and initial profitability and were controlled for size. The findings of the multivariate analysis suggest that initial profitability and size are negatively associated with the performance while other variables suggest a positive association with the outperformance.