Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Omar Saad – Credit Suisse.
Omar Saad – Credit Suisse
Roger, and Tracey, the step down implied by your guidance kind of raises some questions around, and the nature of business around the health of the luxury consumer. We've been seeing what's been happening with some of the higher end department stores, monthly comps in this environment, and you obviously have a view, you have insight into even the more global view of that consumer.
Can you help us understand how that consumer is behaving, what you're noticing, and how they're behaving, and is it different in the U.S. versus Europe versus Asia, and how you think that that part of the business will play out over the next 12 to 18 months?
Roger N. Farah
So, Omar, nothing on the second quarter, just get right into the go forward. I love it. I think your observations are on the luxury consumer are correct. While the last 12 months have been a difficult economic environment, I think the last 45 days has seen an extraordinary series of issues that have affected both the psychology of the luxury consumer as well as their desire to spend on a discretionary level.
So whether it's the high end large specialty stores in the U.S. that have reported difficult September trends and will report, I guess, tomorrow their October trends, or it's some of the smaller specialty stores, I think the luxury customer has contracted their spending in the last 30 or 45 days differently than the last 12 months. I think they're being more selective about purchasing. I think they're looking for something new and novel and different, and where you have it they are reacting positively.
I think the Unites States was probably the first to feel that, but the recent reaction of the luxury customer in Europe, or even some of the markets like Russia where there's been great turbulence in the stock market there, I think the luxury customer around the world has become more careful with their spending. And even in the Middle East, which was riding the gloom of very high oil prices. I think a lot of that has made people at least psychologically more cautious.
So it is something new and different or unusual, spending continues, but we're approaching the back half of the year with a sense that the luxury customer is going to behave differently than they have up until now. So Asia, I would say Japan is feeling it more than the other parts of Asia where growth continues unabated, and so it's really a country-to-country or market-by-market situation. And that's how we're viewing our business and reacting accordingly.
- To read the full transcript on Seeking Alpha, click here »
