Are we seeing the return of luxury?

Italy's Salvatore Ferragamo and Prada are both looking to tap equity markets to fund their expansion into fast-growing emerging markets—signaling what some analysts are calling the return of luxury. But Milton Pedraza, CEO at The Luxury Institute, tells BNN that luxury brands run the risk of alienating their core customers when they are beholden to Wall Street.

“Companies have shown that you do take a risk because shareholders and Wall Street will demand they grow at particular rates, which sometimes is unhealthy for luxury brands,” he says. “It’s an art and a science and so if you grow too fast, if you massify your brand…then you are going to risk the brand and the brand equity.”

Pedraza also says the return of the luxury market is highlighting a divide in the fortunes of the wealthy and middle classes.

“What we’ve seen is that many countries like the U.S. and some countries in Europe are basically split in half. You have the affluent, the wealthy and the ultra-wealthy doing extremely well, and unfortunately you have the middle classes and lower income people doing poorly,” he says.