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Hermes Beats Wal-Mart at Own Game


It hardly seems like a fair fight, but one is clearly the champ.

Hermès versus Wal-Mart (WMT); upscale versus downscale. It hardly seems like a fair fight in these trying economic times: The venerable Paris-based fashion house, whose customers range from traditional royalty to Paris Hilton and Madonna, pitted against the world's largest retailer -- the Bentonville, Arkansas-based discounting behemoth whose customers seem as likely to achieve fame on the Jerry Springer Show as anywhere else.

In fact, it is Hermès and the luxury retailers such as Louis Vuitton Moet Hennessy that have been prospering as of late. Last month, Hermès reported a 12% revenue gain for the second quarter. Today, Wal-Mart weighed in with a 1.4% decline in sales, citing "a sales environment more difficult than we expected."

For a reality check on some of the relevant stocks, I've included the ratio chart below from It tracks a ratio of the Claymore/Robb Report Global Luxury Index ETF (ROB) to Wal-Mart. ROB's top holdings include Porsche, Daimler (DAI), BMW, Louis Vuitton Moet Hennessy, Hermès, Luxottica (LUX), Pernod Ricard, etc. As the graphic shows, the luxury segment has been dramatically outperforming the discount retailer since the March bottom.

Click to enlarge

ROB still hasn't exceeded last Friday's top on an absolute basis or relative to Wal-Mart. While this fact isn't yet noteworthy from a technical-analysis perspective, it does bear watching, going forward.

For a related post, readers may wish to check: Christmas Shopping Strength: Luxury Purveyors vs. Discounters.
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No positions in stocks mentioned.

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