December 30, 2008

Luxury goods market feeling pinched

A decline in luxury goods markets has pressured several European companies to scale back on workforce or expansion plans, the companies said.

French fashion icon Chanel canceled a posh art show at the last minute a week ago and said it would lay off 200 employees in Paris, The Times of London reported Tuesday.

With a global workforce of 16,000, Chanel's announcement in the world of luxury goods "¦ has the impact of a bombshell, the newspaper Le Parisien said.

Luxury conglomerate LVMH has also scaled back, canceling plans to build a mega-store in Tokyo, The Times said.

The company's share value fell 44 percent in 2008. Similarly, Richemont, owners of Cartier and Montblanc, suffered a sharp fall in share values this year.

In total, profits in the luxury goods market is expected to reach $239 billion this year, the newspaper said.