The pigs are officially flying -- high-end designers are cutting prices on their clothes, shoes and handbags. It's not just department stores cutting the costs during their now-weekly sales, it's the manufacturers reducing their wholesale prices before they even ship goods to the stores.
And these are big names -- Chanel, Versace, Dolce & Gabbana -- cutting costs by 8 to 10%. That means that classic Chanel tweed suit you've always wanted, originally retailing for $3,000, is now hitting the stores at $2,700. Not a screaming deal, but now that Saks and Neiman-Marcus are slashing prices by 40 to 60%, hey, it could soon be within your price range!
It definitely is a sign of the times when luxury goods go down in price instead of up (Louis Vuitton and Hermes announced they're holding prices steady for now). But don't shed tears for Donatella, Dolce, Gabbana or any other European designer. A 10% markdown won't dent their profits much because the value of the dollar is increasing against the euro, which means they're not losing as much in markdowns.
Also, luxury designers have high profit margins to begin with (the Wall Street Journal estimates Louis Vuitton's profit margin is 45 cents on every dollar). So even if that Chanel suit is marked down to $1,000, the actual production of that wool boucle suit with gold buttons still doesn't reach that amount. So Karl still makes a profit while you get your (somewhat) steal of a deal.
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