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Sales of luxury goods, everything from apparel, to jewelry and leather goods, are likely to fall globally by 8% this year, to about $227 billion, according to a revised estimate.

The forecast, to be released this morning by consultants Bain & Co., narrows the global decline that Bain had forecast six months ago. In April, it predicted a 10% world-wide sales drop for 2009, citing its expected first-half plunge of as much as 20% followed by stabilization in the second half.

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Foreign visitors walk past a Rolex ad at the Shinsegae department store in Seoul earlier this month.

Claudia D'Arpizio, a Bain retail consultant based in Milan, said, "We are seeing less discounting and mark-downs, and more signs of increasing consumer confidence."

Bain produces one of the few market forecasts on luxury goods. Its latest revision raised its estimate for global sales, but slightly lowered its forecast for U.S. sales.

The U.S., which accounts for roughly a third of luxury-goods sales, remains the worst-hit market. Bain expects U.S. sales of high-end clothing, accessories, tableware, cosmetics and jewelry will drop by 16% this year.

That compares with expected sales declines of 10% in Japan, and 8% in Europe. Together, the three "mature" consumer markets—the U.S., Japan and Europe—make up more than 80% of world-wide luxury good sales.

But a projected 10% rise in sales of luxury items overall in Asia may help to partially offset some of the declines, Bain said. The consultancy expects a 12% increase in 2009 luxury-goods sales in mainland China.

Bain, which releases a U.S. retail holiday forecast later this month, said this morning that it expects to see a 1% decline in sales of luxury goods globally in the fourth quarter followed by 1% growth overall next year. The luxury goods industry likely won't fully recover from the downturn until 2011 or 2012, it predicts.

Many of America's key high-end merchants have continued to suffer in recent months, as shoppers restrict themselves to practical purchases and forgo designer clothing and accessories that may go out of fashion quickly.

Saks Inc. said earlier this month that September sales at stores open at least a year fell 11.6%. Its August comparable-store sales plunged 19.6%. Sales at Neiman Marcus Group Inc. stores open at least a year have fallen by double digits for 13 consecutive months, most recently tumbling 16.9% in September.

For the holiday season, an expected decline in luxury good sales is an improvement over last year's miserable results. U.S. sales of luxury merchandise are set to fall by 2% in November and December, according to the International Council of Shopping Centers, a trade group whose broader holiday forecast for retail called for 1% growth overall. In the 2008 holiday period, sales of high-end goods fell by a whopping 14%, it estimated.

Among the challenges for marketers of high-end merchandise: an aging core consumer base, relatively low consumer confidence, and the personal financial hit many wealthy shoppers have suffered, Bain said. This year's growth in off-price outlets and a surge in "friends and family" discounts diminished the industry's pricing power, Bain added.

Internet sales for the industry are projected to grow by 20% this year, the consultancy said, citing a consumer shame about conspicuous purchases of big-ticket designer goods in stores. The Web channel offers privacy, although it still remains less than 3% of the luxury marketplace.

Source online.wsj.com