Gucci may have hit a bump in the road but luxury French leather goods retailer Hermes is still going strong. The company has announced that first-quarter sales accelerated 13.4 percent to 415.1 million euros, or $621.7 million at average exchange rates. The company has seen strong performances in all categories and area. Sales in the Americas are up 23 percent, partially due to the new Wall Street location that opened last June. Sales in Japan are up 4.2 percent. The firm has maintained its guidance of 10 percent organic sales growth for the full year. Hermes plans to open or expand 25 branches this year with their first location opening in New Delhi's Oberoi hotel next week.

The numbers from Hermes echo similar strong numbers from LVMH Moet Hennessy Louis Vuitton, Compagnie Financiere Richemont, Burberry and Swatch which seems to indicate that the upper end of the luxury market is still fairly secure. Hermes has, for the most part, kept their product range small and pricey which seems to be a good strategy in this market where the rich are still spending but the upper middle class are starting to watch their money more carefully.

More bad news for the luxury market, the Wall Street Journal reports on Gucci's sales figures. Sales at Gucci fell 3.3% in the first quarter. What's interesting is that Gucci's new strategy to improve their bottom line is to market lower-price products more aggressively. This goes against the common wisdom for luxury brands which is that the when the economy is down it is the time to focus on the affluent consumers who are still spending. Gucci also announced this week that popular actress Claire Danes will be the face of their fine jewelry line which follows an announcement that James Franco is the new face of the latest Gucci fragrance.

Other brands in the luxury world including Louis Vuitton are still doing well and perhaps Gucci is looking to mimic that glossy success. The Chief Financial Officer of Gucci's parent company PPR Jean-François Palus has said that the brand was focusing too much on their more expensive products such as those in the Pelle Guccissima line (even though the brand did well last year with over 2.2 billion euros in sales). Gucci is one of the brands that has weathered the most storms in the luxury market, languishing for years before being revitalized during the Tom Ford era, and I have no doubt they will triumph in the long run.

Luxury retailer Hermes has launched their new online magazine. Les Ailes d'Hermes (the Wings of Hermes) is a new interactive experience that showcases the product range in a bunch of different ways. I played around with it recently and while some of the windows are intriguing (looking at coral-emblazoned accessories set in water through a porthole like window is a charming touch) the site is not for those with short attention spans. If you know what you are looking for and want to see it quickly this is probably not the part of Hermes you are looking for. But if you are in a browsing mood and interested in seeing some of the more unique products in the line this is a fun place to explore. Click on a ripe apple and you are led to a bright green bag, the perfect shape to hold one apple, with a paring knife set into the strap.

Other sections of the site are illustrated with classic drawings and invite you to explore iconic objects in the Hermes history. It's an attractive site but the quality of the photography and illustrations leads to some slow loading time and the menu isn't exactly intuitive. The site manages to be both modern and old-fashioned at the same time, which is sort of the essence of Hermes, a brand that has fought very hard to maintain their traditional past and still appeal to today's customer.

[via Vogue UK]

Do luxury markets really hold up better than others during an economic crunch? Many experts say no, and it would seem the steady decline in luxury auto sales is backing them up. Estimates say that automobile sales fell in March, which would mark the 5th straight month of decline and could result in the lowest numbers since 2005. Analysts speculate the drop in auto buyers has to do with several factors, including higher-end buyers holding onto their vehicles longer (waiting for the market to improve) and fewer entry-level lux auto owners being able to afford to buy right now due to increasing costs in other areas of their budget.

Luxury collectible glass company, Steuben Glass has been put up for sale by longtime owner Corning. Corning has owned the business since 1918 and Steuben is now the only maker of luxury lead crystal left that is still handcrafted in the United States. Unfortunately, the company, which creates a variety of special edition pieces including a most recent partnership with artist Kiki Smith, has been unprofitable for a decade, losing around $30 million over the last five years. Corning has said that the company will be unloaded this year even if they have to shut the company down. Steuben Glass generates around $25 million in annual revenue and employs 150 people. Another option Corning is considering is selling the brand name but keeping the factory in operation. A move that I think would be a shame since part of the prestige of Steuben is its heritage and tradition. Sadly the beautiful glass collectibles aren't considered fashionable and appeal mostly to an older generation. Steuben has tried to attract younger consumers through collaborations with high-profile designers such as Smith and Ted Muehling but so far that hasn't been enough to generate profitability.

Donald Trump has one, now Martha Stewart is supposedly working on a big glossy luxury magazine. Advertising Age reports that Martha Stewart Living Omnimedia may be working on a oversized luxury title. While the magazine industry in general remains in a state of change, heavy and huge luxury titles with big glossy ads remain attractive because they offer advertisers a way to find the luxury consumer. In these cases the income of each reader is more of a lure than how many readers the magazine attracts. It also gives the advertiser ample space to showcase their products in a magazine that is meant to be more for looking than for reading. Trump's title has a 12-inch-by-10-inch cover and it is rumored that Martha's luxury magazine would be an oversized title like W or Cigar Aficionado.

I've written before about closed online shopping communities but for the most part they have remained relatively limited. That might change a bit with the latest partnership. Long-standing closed social network A Small World has partnered with online luxury fashion site Net-A-Porter to let members of A Small World access and shop directly from the latest international designer collections. Members of A Small World can log on to a special Net A Porter micro site that features the latest looks from over 200 brands including many limited edition items. The site will be updated on a weekly basis and will also have gift guides for shoppers.

The luxury market may be floundering but don't look for Saks Fifth Avenue to go down market any time soon. In an interview with MarketWatch, Saks chief executive Steve Sadove said that he is going forward with plans to renovate the company's stores, spending a projected $150 million. He is also committed to luxury brands, expanding the distribution of top-tier labels such as Chanel and Gucci, a brave move at a time when the brands that are desired most by aspirational consumers might be vulnerable to the biggest hits. Consumer confidence among luxury consumers is at an all-time historical low. Unity Marketing's Luxury Consumption Index has shown that more than two-thirds of those with an average income of $155,700 believe the economy is in trouble. Sadove, however, is looking beyond this year hoping that his strategy will pay off in the long run. You may find some particularly helpful salespeople in Saks too, part of Sadove's strategy is to have as much as 90% of the Saks sales staff working on commission, up from about 50% three or four years ago.

Women love to shop...it's like a law of nature or something. But it's no secret that lately the economy has been slowing down and the luxury market has been taking a hit -- high-income women may still love shopping but they're doing it a lot less. So how do luxury retailers plan to weather this storm? By making their products so compelling and irresistible that other purchases are put on hold to make room. High-end shoppers on a budget are not likely to trade down and start shopping at cheaper retailers, but instead they just become choosier with what they buy. In other words they may be buying less, but they're not stopping completely. So that awesome new handbag may have to yell a little louder to get attention, but it can still call your name like it always did.

Our friends at Autoblog are at the Detroit Auto Show this week and one of the cars there that is drawing a lot of attention is the Fisker Karma. The Karma, designed by Henrik Fisher, is a premium hybrid sedan. Autoblog reports it is powered by the Q-DRIVE, a system from Quantum Technologies in which a four-cylinder engine powers a generator to move the car. It can do the zero to 60 hop in 5.8 seconds and reach a top speed of 125 mph. It can run on just electricity or in sports mode which uses the four-cylinder engine. Luxury features of the four-door sedan include a navigation system and DVD player with headrest-mounted displays. The first 99 will be signed by the designer. The cars won't be available until 2009 and sell for $80,000.

It was this same week two years ago that we first heard about the opening of Vera Wang's first lifestyle boutique at the Halekulani resort in Waikiki. The small 600-suare-foot boutique sold clothing, sunglases, jewelry fragrance, china and crystal but will now close after selling off the store's inventory. In an article by Fashion Week Daily, Donna Bebber, the boutique's owner said that Wang's decision to discontinue her high-end jewelry line led to a drop in sales. Bebber has three years left on a five-year lease with the hotel that says she can only stock Vera Wang merchandise but hopes to change the lease so she can add other products. If not, the boutique will be permanently closed. In the two years since the Vera Wang boutique opened, the brand has spread all over the place including a low-priced fashion line at Kohl's and Bebber mentioned that some customers may have felt that she is spreading herself too thin.

Could the third time be the charm for Trump magazine? Donald Trump has twice before published a luxury magazine with his name on it that lost money. But late last year Trump announced that he would be partnering with luxury publisher Ocean Drive Media on a relaunch. Mediaweek reports that the debut January issue had a healthy 144 ad pages (including luxury brands such as Gucci and Cartier), and the second issue has another 290 booked.

Trump has stated that he is interested in having the magazine not for his self-aggrandizement, but as a service to his hotels and condos. Trump's magazine does have a captive audience. The magazine, which has a distribution of 100,000, will be delivered to all Trump properties and newsstands. It will also sell for $5.95 in limited locations. Jerry Powers, Niche Media president , says that the luxury market is strong despite an overall weakness in magazine ad sales. With The Apprentice doing well in the ratings once more, could this, once again, be the year of Trump?

Yesterday, Pope Benedict XVI spoke out against luxury. As part of his homily in St. Peter's Basilica to mark the Catholic feast day of the Epiphany, the Pope said that we are creating a world where the haves and the have-nots are far apart. He preached that moderate lifestyles can help redistribute wealth and ease the fight over natural resources calling for "a greater hope, which allows us to prefer the common good of all to the luxury of few and the poverty of many."

This is not the first time the Pope has taken a swing at luxury. Last June the Vatican issued a 'rules of the road' document that said cars should not be used "as a means for outshining other people and arousing a feeling of envy." Wise words, but the Pope may want to tend to his own garden first. in 2005, he reportedly received a BMW SUV and his taste for designer labels such as Prada and Gucci has been well-documented.

Here's a unique idea: diamonds that are suspended in glass. Natascha Marx and glass artist Tobias Berger have partnered up to create Diamonds in Glass. The concept has a lot of applications including luxurious stemware, caviar dishes, napkin rings and ashtrays as well as jewelry items like rings and bracelets. There are two main types: the pure, which has the diamond in clear glass, or the black edition, where the backside of the diamonds is embedded in black colored glass and the diamond has the diamonds against black velvet effect.

The pieces are made of borosilicate glass which has a melting point of around 1200 ºC, (diamonds burn at a temperature of about 800 ºC). The glass blower introduces the diamond into the viscous glass mass and places it in the desired position. The Diamonds in Glass website has a video of the process. Prices start at around 1620 euros for a small glass. Check out the gallery below for examples including the most expensive Champagne glass I have ever seen.

Is collecting art a luxury or an investment? This simple question has some complex repercussions. The Wall Street Journal reports on the legislation sponsored by two senators, Pete Domenici (R., N.M.) and Charles Schumer (D., N.Y.) to change the tax treatment of sales of art and other collectibles. The capital-gains tax rate of 28% for the sale of art is quite steep compared with only 15% for the sale of real estate and securities (the rate for real estate and securities was also 28% until two measures reduced the rate). The senators argue that the tax rate is unfair to the art industry and punish those who invest and deal in art. Their legislation is endorsed by both Christie's and Sotheby's auction houses and the Art Dealers Association of America.

Another long-standing issue in the art community is the fact that when artists donate their work to museums, libraries and other nonprofit institutions they are only able to deduct the cost of materials rather than the full fair-market-value deduction on their taxes for their gifts. Talk about a disincentive to donate.

Is the problem that the government does not see art as serious business? The WSJ article quotes Joseph Cordes, professor of economics, public policy and public administration at George Washington University who says that the government is interested in encouraging people to invest in business that stimulate job growth and tax revenue and art doesn't really do that. He also says that reducing the capital gains on art sales might discourage certain collectors from donating to museums.

Those opposing changes to the law say that lowering the capital-gains tax rate would just benefit the wealthy without adding anything to the overall economy. The question may come down to the perception of the art world. Is it simply a luxury for the wealthy or is it an industry that impacts people at a variety of income levels? Part of the resistance to these tax bills may be that in supporting them those in Washington could be seen to be creating another way to help the rich get richer.