Luxury retail coming back?

As usual, the signals are mixed. Williams Sonoma's executive VP, Pat Connolly, told a Merrill Lynch conference that, "We are working diligently to restructure our portfolio of stores and optimize our sales and costs per square foot. This will be accomplished by selective store closings and lease negotiations." Look for markets that have multiple stores (Socal is one) to see closings, though the retailer is not talking specifics. Williams Sonoma also owns Pottery Barn and Pottery Barn Kids.

Meanwhile the company reported a big jump in fourth-quarter earnings (beating its forecasts) and projects a strong first quarter. Also reporting good earnings today is Tiffany. The Atlantic's Daniel Indiviglio figures it's a sign that luxury may be coming back.

Other news we've been seeing recently about the rich getting richer would also indicate that luxury should be faring better. Let's face it: these retailers don't need unemployment to decline. As the stock market and corporate profits improve that should directly help their target population. And wealthy individuals with a lot of equity holdings or jobs in corporate management are definitely feeling much richer than they were a year ago. That should make them more comfortable buying more luxury goods. Just as the wealthy generally recover more quickly coming out of a bubble-based recession, so should luxury.