RAPAPORT... Luxury retailers will be keeping a watchful eye on bonus payouts this holiday, as Christmas on Wall Street is expected to reflect the year’s economic activity more than ever before.
Bearing the brunt of the credit crunch and mortgage crisis that broke in July, mortgage professionals are gearing for a massive pay cut and could see as little as 50 percent of their 2006 bonus payments this year. Similarly, most United States and European fixed income desks could be down 30 percent or more on their bonus checks, according to research and consulting firm, Options Group.
Mortgage professionals, however, may be the only ones with less to spend this year as most other financial service providers can expect more out of their bonuses.
Options Group said in its 2007-08 Financial Market Overview and Compensation Report, that investment bankers should receive bonus packages 10 percent higher than in 2006, after a record year in mergers and acquisitions. European and Asian equity underwriters also should receive their highest-ever bonuses as investors there clamored for new issues, the company said.
Also among the winners this year, equity cash and equity derivatives salespersons, traders and structurers are expected to earn 10 to 15 percent more on average in bonuses than they did in 2006, while commodity salespersons and traders will receive bonuses 15 to 20 percent higher than in 2006.
According to Bloomberg, $38 billion in bonus payments will be made to employees at the five biggest Wall Street securities firms - Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos., - compared with $36 billion in 2006. With 186,000 workers between the top five, that would be an average $204,301 per person.
While luxury consumer confidence weakened in the third quarter (according to luxury researcher, Unity Marketing) retailers will be hoping the extra money will transfer from Wall Street to Madison and Fifth avenues' jewelry stores.
Unity Marketing’s Luxury Consumption Index, released in October, reached its lowest point in third quarter 2007 after surveying 1,000 affluent consumers whose average spending on luxury dropped 21 percent from the second quarter to $12,142.
Unity warned at the time that the negative turn in luxury consumer confidence could result in weak performance this holiday season.
Unity’s president, Pam Danziger, told Rapaport News that consumers tend to view luxury as a reward item and that while the company has no research to support the theory, discretionary logic would say they would spend their bonuses on such items.
“Luxury retailers would certainly target the Wall Street type,” she added.
|
|
|
|
|