Coming out of the recent recession, consumers have become more selective than ever by focusing on certain factors when deciding where to spend their money.  Specifically, retail sales over the past two years have highlighted consumers’ preference for trendier goods and services, better value, and superior quality. 
 
Furthermore, even as the unemployment rate continues to hover around 9%, this number varies significantly among workers with different levels of education.  While the unemployment rate is nearly 15% for those who haven’t completed high school, it is a much more modest 4.5% for those with a college degree.  In other words, unemployment is lowest among the highest educated and, presumably, highest earning groups.
 
As a result, many different retailers offering the consumer affordable luxuries have fared well since the end of the recession and are projecting 2011-2012 to be among the best years in recent memory. 

When most people think of companies selling affordable luxury goods, images of fancy clothes, shoes, or accessories rightfully come up.  Companies such as Coach and Steve Madden remain popular retailers as they have expanded their offerings from the primary feature that they have been known for.  Coach, widely recognized for its handbags, now counts accessories – including wallets, footwear, and jewelry – for more than one-third of its sales mix.  Meanwhile, Steve Madden sells sunglasses, belts, and handbags to complement its stylish shoes and boots.
 
With this said, however, the definition of affordable luxury now extends well beyond just physical goods.  Many dining companies offer products and an experience that enable them to transcend traditional fast food restaurants, yet are still relatively inexpensive versus upscale eateries.  Two companies in this growing niche segment that Condor Capital has recognized are Chipotle Mexican Grill and Crumbs Bake Shop (currently trading under 57th Street General Acquisition Corporation).
 
 
 
 
 
 
Chipotle has been called a leader in the “fast casual” segment where customers can enjoy a feel-good environment and eat comparatively healthier food at prices that are more than some competitors’, yet still affordable.  The company’s “Food With Integrity” campaign promotes the company’s use of animals that are raised naturally without hormones and local produce that may even be organic, if available. 
 
As for the food itself, instead of placing an order at the register and having the meal prepared in a kitchen that is out of view, Chipotle has instituted an interactive model that allows the consumer to customize his/her meal by dictating to the preparer which of the high-quality ingredients to include. 
 
This combination has been a strong recipe for Chipotle, as evidenced by revenues that surged 24% in the first quarter of 2011. 
 
Another name is Crumbs Bake Shop, the largest domestic retailer of gourmet cupcakes.  With a variety of sizes and mouthwatering flavors such as Caramel Apple and S’Mores, Crumbs has done its part to make sweet treats an affordable luxury.  Most cupcakes cost a relatively higher $3.00 to $4.00 and the average transaction ranges from $18.00 to $20.00.  Meanwhile, it only costs Crumbs slightly more than $1.00 to produce the average cupcake, while the company’s average sales per square foot is more than $1,000 – among the highest in the industry. 
 
Overall, with unemployment relatively low among the highest-educated portion of the population, it stands to reason that the strong momentum for affordable luxury companies out of the recent recession will continue.  This surge is expected to not only be led by goods companies like Coach and Steve Madden, but by dining companies such as Chipotle Mexican Grill and Crumbs as well.
 
At the time of this article, Condor Capital Management held positions in Coach, Steve Madden, Chipotle Mexican Grill, and 57th Street General Acquisition Corp through its Large Cap Growth Strategy.

From the Financial Planning Corner

Establishing a Credit History of Your Own
 

In this consumer society, we have a ‘buy now, pay later’ mentality with many must-have products on the market. Unfortunately, our great desire for credit may be chipping away our financial security as Americans continue to rely on borrowed money to sustain their existing lifestyle. 
 
What is it?
When you say you want credit, you are probably asking for payment terms on a purchase.  You are seeking to purchase goods or services today and looking to defer all or a portion of the payment until a later date.  Installment credit is money owed to a creditor who expects repayment over a fixed period of time made in equal monthly amounts.  It enables many people to make major purchases that would be nearly impossible to finance up front.  A mortgage or car loan are examples of installment debt; generating the same payment over a fixed schedule of time.   In any event, you are making a purchase and being trusted to make final payment at some time in the future. 
 
Take care of your credit

Credit provides you with financial flexibility and security.  Whether you are unable to make immediate payment, can’t get access to your cash, or are faced with unexpected circumstances, credit allows you to obtain goods and services today that you will not have to pay for until a later date.  If you pay as agreed, the lender will likely want to do business with you again. 
 
On the other hand, if you don’t pay as agreed, the lender will likely be less willing to extend credit in the future or will charge you a higher interest rate.  As time goes by, you establish a reputation.  If you have paid your bills, it will be said that you have good credit or that you have a good credit rating.  This will enable you to obtain more credit from other lenders in greater amounts. 
 
If you have not paid your bills, or have consistently paid them late, it will be said that you have negative credit, which makes it increasingly difficult to get any type of advanced lending.  If you’re judged a poor credit risk, you may be refused a home mortgage, rejected for an apartment rental, or turned down a car loan.  
 
Developing credit
Creating a positive credit history for yourself requires using your credit card wisely.  Here are some dos and don’ts to help you manage credit effectively:

 

Consumer credit report
A consumer credit report is a document that contains a factual record of an individual’s credit payment history. Lenders are often permitted by law to review your credit report to objectively determine whether to grant you credit. A consumer credit report contains four types of exceptionally detailed information:

 
Keep in mind...
Be aware that negative information can only be kept in your file for a limited time.  Negative information stays on your report no more than 7 years from the original date of delinquency. Negative information can be any unpaid debts, late payments, liens, too many credit cards and bankruptcies. Bankruptcies can stay on your report for up to 10 years.
 
Without a credit report, lenders have nothing to base their judgment on.  It is easy for a lender to deny you credit when you have no credit history.  If you want to establish credit there are things to consider.

 
Not enough credit?
If you have not established credit, you can still obtain financing for major purchases if you can afford to make a large down payment.  A large down payment reduces the lender’s exposure by decreasing the loan amount.  With a smaller outstanding balance, there is less at stake for the lender.  The large down payment also makes your monthly costs lower and shows the lender that you are committed to making the purchase. 
 
Check for accuracy
AnnualCreditReport.comis a centralized service for consumers to request free annual credit reports. It provides consumers with the secure means to request and obtain a free report once every 12 months from each of the three nationwide consumer credit reporting companies in accordance with the Fair and Accurate Credit Transactions Act.  AnnualCreditReport.com is the only service authorized by Equifax, Experian and TransUnion for this purpose. The three nationwide consumer credit reporting companies have always encouraged consumers to regularly review their credit reports.  The Fair Credit Reporting Act entitles you to review information in your credit file.  While it is crucial to be credit smart, it’s a good idea to obtain a copy of your credit report to check it for accuracy.   Your credit history requires maintenance.  Even if you pay your debts on time, don’t assume that your credit rating is flawless.