Luxury Chains Take Cues From Cheaper Rivals

DALLAS (TheStreet) -- For a brief moment in October, pessimism haunted the luxury market with ghosts of last year's sales and overstock. Then Neiman Marcus sold 50 Jaguars from its Christmas book at $105,000 a pop later that month. Happy holidays.

For most high-end retailers, the contents of Santa's bag are mixed at best. Consulting firm Bain & Co. predicts holiday sales to remain even or rise 1%, compared to a 5.3% drop last season. However, Bain expects luxury sales to fall 8% worldwide, with sales of clothing accessories, cosmetics and jewelry declining 16%. A full recovery isn't expected until 2011.

This year's holiday season is a microcosm of the naughty and nice news the luxury sector's been receiving all year. The Claymore/Robb Report Global Luxury(ROB Quote) exchange traded fund, which counts Luxottica Group(LUX Quote), Coach(COH Quote) and LVMH Moet Hennessy Louis Vuitton among its holdings, has more than doubled since March 6. However, it lost 60% during the year before that. Neiman Marcus, which owns luxury retailer Bergdorf Goodman, said same-store sales fell 6% last month, an improvement from last October's 27% drop, but far from pre-downturn levels.

While this year's Neiman Marcus Christmas book features over-the-top gifts such as a $250,000 ICON A5 sport aircraft with his-and-her pilots license training, nearly half of its items cost less than $250. In the last five years, only 30% to 40% of the catalog's offerings have been priced that low.

Tiffany(TIF Quote) slowed expansion efforts while adding cheaper products, such as its "keys" jewelry collection. Saks(SKS Quote), meanwhile, avoided last year's 70% holiday discounts by cutting its stock 20% this season.