Prada Handbags

ROME (Dow Jones)--Luxury goods sales are expected to rise 8% in 2011 to EUR185 billion, as shoppers in fast-growing markets like China and Russia quench their appetite for high-end handbags and clothes, said a Bain & Company study released Tuesday.

The study, presented by Italian luxury association Fondazione Altagamma, said growth in 2011 is expected to be slower than the 12% rise to EUR172 billion experienced in 2010. In 2010, the luxury industry rebounded from 2009--a year that Altagamma refers to as the "annus horribilus."

Worldwide, the luxury goods market's compound annual growth rate is seen at about 5% to 6% in 2011 to 2014.

Luxury's biggest players posted buoyant sales in the first-quarter of the year. Companies like France's PPR SA (PP.FR) reported a 9.1% rise in sales to EUR3.71 billion in the first quarter, while LVMH Moet Hennessy Louis Vuitton SA (MC.FR) reported a 17% jump in first-quarter sales to EUR5.25 billion.

China revenue was a key driver for Italian luxury makers like Bulgari SpA (BUL.MI), Prada SpA and Salvatore Ferragamo SpA.

Mainland China will continue to be the most rapid growing market for luxury and will rank as luxury goods' third-largest market in five years, Bain said. In 2011, China and the rest of Asia Pacific are expected to stage double-digit growth, rising 25% and 15% respectively.

Japan, a market that has been struggling since 2007, is expected to slide 5% this year as the nation recovers from the March 11 earthquake and nuclear crisis that shut Tokyo stores for 10 days, Bain said.

"First signs of recovery are expected already from the third quarter, also fueled by growing GDP due to the reconstruction," Bain said.

In a separate study, Altagamma said that by sector, leather goods, shoes and accessories are expected lead gains, rising 12.5% in 2011, followed by the jewelry and watches sector, which is expected to rise 11.5%.

On the whole, the luxury sector's earnings before interest, taxes, depreciation and amortization, or Ebitda, should rise 13% in 2011 compared to a year earlier, Altagamma said.