Tarnished luxury goods

But now there are disturbing signs. On Tuesday, Coach (NYSE:COH) shares dropped nearly 12 per cent after it warned of weak retail traffic trends in the US over the past few weeks. Research by Telsey Advisory Group suggests that the breakneck growth of the $7bn US handbag market is slowing. The slumping housing market and lower banking bonuses could crimp US and UK holiday spending. Some big brands may also be losing their exclusivity. Makers such as Louis Vuitton have thrived by convincing shoppers to upgrade to the latest pattern every season, but how long can that last?

The test could come next month when big European players, PPR and Richemont, announce third-quarter sales. But even if the sector cools generally, there may be room at the very top.

PPR has had success positioning its ultra exclusive Bottega Veneta brand this way. For investors, buying into the trend may get easier. Salvatore Ferragamo has picked an adviser for a planned 2008 initial public offering, and Prada is headed that way. Investors have been here before - Prada pulled a planned IPO after the 2001 terrorist attacks. While it is hard to beat LVMH on range, these super luxury brands could attract high-end customers who can walk right in during the economic tough times that keep normal noses pressed against the glass.