Luxury spending sparkles, execs say

By Aarthi Sivaraman

NEW YORK (Reuters) - While discount retailers like Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research, Stock Buzz) have seen sales battered by soaring gas prices and the slumping housing market, high-end shoppers are still crowding tony stores and buying expensive baubles, executives said at the Reuters Consumer and Retail Summit this week.

"The luxury consumer is spending again like mad because they've got the income, and the middle consumer is being cautious about how they spend," said Gilbert Harrison, chief executive of investment bank Financo Inc.

Rising costs for everything from milk to gasoline and the continuing troubles with the U.S. housing market have squeezed consumer spending overall.

But that doesn't seem to have ruffled the feathers of the wealthy.

Armed with hefty bonuses (especially for those on Wall Street), they are shopping for Chopard diamonds, and Gucci and Chanel products. Only those at the "lower end" are choosing between gas and clothes, Saks Inc. (SKS.N: Quote, Profile, Research, Stock Buzz) Chief Executive Steve Sadove said.

"As much as $4.00 or $3.00 (per gallon) gas is an issue, I don't think that's as much of a driver as what's happening in the financial markets," Sadove said.

Analysts supported that view.

"The upper-income consumer kept spending in May, which is evident from stronger sales at more fashionable department stores and warehouse clubs that cater to these customers," Deutsche Bank analyst William Dreher Jr. wrote earlier in a note reviewing May same-store sales.  Continued...