4 December 2008
Luxury goods quarterly
The world in charts
Francesca Di Pasquantonio
Research Analyst
(39) 02 86379 753
francesca.dipasquantonio@db.com
Warwick Okines
Research Analyst
(44) 20 754 58546
warwick.okines@db.com
Jamie Isenwater, CFA
Research Analyst
(44) 20 754 75170
jamie.isenwater@db.com
Third edition of our Luxury Goods publication (The world in charts)
This is the third edition of our regular sector product 'Luxury Goods Quarterly – the
world in charts'. It provides a snapshot of the most recent events in the Luxury
Goods sector, highlights interesting trends and identifies emerging themes. This
edition features a 'Christmas special': Q4 and FY08 previews for all our
companies.
Deutsche Bank AG/London
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local
exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche
Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm
may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision. Independent, third-party research (IR) on certain companies covered by DBSI's research
is available to customers of DBSI in the United States at no cost. Customers can access IR at
http://gm.db.com/IndependentResearch/ or by calling 1-877-208-6300. DISCLOSURES AND ANALYST CERTIFICATIONS ARE
LOCATED IN APPENDIX 1.
Industry Update
Companies featured
Bulgari SpA (BULG.MI),EUR4.70 Hold
2007A 2008E 2009E
DB EPS (EUR) 0.51 0.40 0.41
P/E (x) 21.4 11.7 11.4
EV/EBITA (x) 20.3 11.6 10.5
Burberry Group (BRBY.L),GBP195.00 Buy
2008A 2009E 2010E
DB EPS (GBP) 28.50 30.95 30.53
P/E (x) 20.6 6.3 6.4
EV/EBITA (x) 13.9 4.9 4.5
Hermes (HRMS.PA),EUR99.00 Sell
2007A 2008E 2009E
DB EPS (EUR) 2.71 2.73 2.80
P/E (x) 33.2 36.2 35.3
EV/EBITA (x) 21.7 22.7 22.1
Luxottica (LUX.MI),EUR15.07 Hold
2007A 2008E 2009E
DB EPS (EUR) 1.14 1.13 1.15
P/E (x) 21.7 13.4 13.1
EV/EBITA (x) 15.7 10.6 10.0
LVMH (LVMH.PA),EUR44.22 Hold
2007A 2008E 2009E
DB EPS (EUR) 4.23 4.61 4.18
P/E (x) 19.7 9.6 10.6
EV/EBITA (x) 12.5 7.0 7.1
PPR (PRTP.PA),EUR37.24 Hold
2007A 2008E 2009E
DB EPS (EUR) 7.45 6.53 5.82
P/E (x) 16.6 5.7 6.4
EV/EBITA (x) 13.6 6.7 7.1
Richemont (CFR.VX),CHF20.30 Buy
2008A 2009E 2010E
DB EPS (EUR) 1.69 1.52 1.47
P/E (x) 13.5 8.5 8.7
EV/EBITA (x) 10.5 5.9 6.0
Swatch Group (UHR.VX),CHF134.40 Buy
2007A 2008E 2009E
DB EPS (CHF) 18.06 17.58 17.60
P/E (x) 18.6 7.6 7.6
EV/EBITA (x) 13.6 4.4 4.4
TOD's Spa (TOD.MI),EUR31.39 Hold
2007A 2008E 2009E
DB EPS (EUR) 2.56 2.70 2.82
P/E (x) 24.4 11.6 11.1
EV/EBITA (x) 14.5 7.1 6.7
Global Markets Research Company
Sector view – Long-term opportunities, short-term risks
In mid October, we published a Luxury sector review in which we noted that
despite downward risk to earnings, the sector selectively started to offer some
value. We removed our Underweight stance and upgraded Richemont, Swatch
and Burberrry to Buy.
The market is already pricing in EM weakness
We estimate that current market prices are already discounting a 40-50% miss vs.
our current earnings, which implies a scenario where the top line contracts by 10-
15% in the next two years as a result of combined weakness of both the mature
and the emerging consumers. This might well be a possible outcome, yet we
believe it is already priced in.
Chart of the quarter
Figure 1 illustrates H2 EBIT margin evolution and indicates that our H2 forecasts
are overall very cautious on the industry, which implies a sharp deterioration in Q4
trends, given the healthy 9M performance and helpful currencies. In a nutshell, we
are assuming that all of the margin progression since 2004 is wiped away.

Table of Contents
Introduction ....................................................................................... 3
The world in charts (Third edition).............................................................................................3
Sector trends ..................................................................................... 4
Degree of Emerging Market weakness to be key.....................................................................4
Europe......................................................................................................................................5
North America..........................................................................................................................6
Japan .......................................................................................................................................7
Asia ex-Japan...........................................................................................................................8
Currency trends ................................................................................. 9
US$ and JPY strength becomes a major tailwind .....................................................................9
Company trends .............................................................................. 11
Bulgari (Price