Will Luxury Lead the Retail Recovery?

NEW YORK (TheStreet) -- Luxury is back. Maybe not in the form of the conspicuous consumption seen pre-2008, but high-end retailers are at least starting to pick up profit gains.

That was made clear today when Saks(SKS Quote)posted a surprise third-quarter profit.

During the quarter, the high-end department store earned $1.93 million, or 1 cent a share, compared with a loss of $43.7 million, or 32 cents, in the year-ago period. Analysts expected a loss of 11 cents a share.

Saks even said it began seeing strength in its women's designer sportswear category, jewelry and its New York flagship store.

"Luxury was the last to go into the recession, and in many cases it fell the hardest," Needham analyst Christine Chen says. "But luxury may improve sooner than everyone thinks."

Luxury Lesson is UPROD

But to what extent the luxury sector will recover in the near-term is still up for debate.