The Haves Still Have It : Good Times and Bad, O.C.’s Rich Keep Spending

What’s that? A recession’s on, you say? On its way out or not, that may come as news to some.

Take the man who shops at South Coast Plaza in Costa Mesa three times a week, valet parking one of five cars.

“He has a Mercedes station wagon, a Range Rover, three Porsches and just gave a Porsche to his girlfriend,” says one of the attendants. “And he gives a $20 tip, every time.”

Or Cartier, the exclusive jewelry store that will be moving into a swankier, one-third larger showroom at South Coast Plaza soon because sales are up 26% this year.

“We will be bringing the new Paris design and decor and all of the architectural ingredients of the Paris store,” Cartier Chairman Ralph Destino said recently.

Or the socialite who said that she, like all her friends, has felt the pinch, but snapped up “two or three designer dresses in the $3,000 range” the other day. Nothing fancy, just street wear, she said.

A recession’s on, you say? Evidently not in certain circles, circles that revolve in Orange County around $300 leather fanny packs, $10,000 chinchilla fur coats and $125,000 diamond rings.

The rich “always have it,” said Robin Devris, co-manager of Apropos, a posh clothing store in Fashion Island in Newport Beach where shoppers have been spending as much of it as they did last year.

There aren’t any studies on how recessions affect the mega-wealthy, economists say. But the upper crust tends to spend generously in bad times and good, unlike middle- and lower-income individuals without the same job security or financial safeguards.

“The very rich get a lot of their income from financial investments, such as securities and municipal bonds, and interest rates tend to go down in a recession, driving the prices of municipal bonds up, enhancing their returns,” said Robert Haugen, professor of finance at UC Irvine. “Also, the stock market usually leads the economy out of recession, so while the real economy tends to be performing poorly, the stock market does well.”

But other experts say the wealthy aren’t recession-proof. Particularly vulnerable are those in the housing industry, which, despite recent signs of recovery, has taken its worse beating locally and nationally since the last recession in 1982. Suppliers of the biggest, most sumptuous estates are groaning the most.

And, there have been some indications of a decline in luxury spending.

Nationally, sales are slumped at such upscale stores as Saks Fifth Avenue, Bergdorf Goodman and Neiman Marcus, according to Alan Millstein, publisher of Fashion Network Report in New York.

The jewelry industry remains in a 2 1/2-year slowdown, says Michael D. Roman, chairman of Jewelers of America Inc. in New York, who put his national membership at 20,000 stores. Similarly, yacht brokers are enduring a long dry spell.

Retailers in general, no matter the price of their merchandise, have reported weak sales recently, though some now see hints of an upswing.

In Orange County, 1990 third-quarter taxable sales fell (by 0.4%) for the first time since the 1982 recession, and yacht sales, aggravated by the new federal luxury tax, have remained depressed, local brokers say.

But by and large, it appears that the county’s elite has not relinquished its sybaritic lust for luxury, when it comes to the priciest baubles, furs and haute couture.

Neither Saks Fifth Avenue, with an outlet in South Coast Plaza, and Neiman Marcus, which has a Fashion Island store, will release local sales totals, though both malls harboring the stores reported increased sales for 1989. More recent figures are not available.

Cristy Scheuer, owner of Red Haute, another tony Fashion Island clothing boutique, said sales are down 20% from the same period last year. But the really rich never stayed away, she said.

“You’ve got (three) tiers of customers,” Scheuer said. “The upper tier is always around. The middle tier was very, very nervous, but they are starting to come back. The lower tier is walk-in, and we don’t rely on that.”

Next door, at Apropos, the Gulf War caused a lull, said co-manager Devris. It ended even before the short conflict, however, with customers returning to buy $275 cowhide-covered jeans.

“After about three weeks, things picked up and we’re now back to where we were last year,” Devris said. “Recession, war . . . our clientele aren’t affected by those types of things.”

In general, business at Fashion Island has been brisk, thanks to a $100-million renovation finished in late 1989, mall officials say. For that year’s final quarter, they reported a 54% mall-wide increase, although the figure included retail space for 60 new stores.

Top-of-the-line retailers aren’t complaining. Custom shirt maker Moda Georgio recently filled a $4,800 order for 15 cotton shirts and a jacket, a salesman said. Wyndham Leigh jewelers, like Cartier, is feeling expansive too. Last Christmas, the usual number of customers crowded the store, but spent less, admitted Bruce Lambert, Wyndham Leigh owner.

“However, since Dec. 26, we have never been so busy,” said Lambert, who attributed the unprecedented success partly to Fashion Island’s renovation.

The place bustled the other day around lunchtime. Shoppers in silver lame sneakers and stirrup pants were seated around the shopping center’s Atrium Court eating area, downing gourmet salads and $1 Italian cookies to the lilting melodies of a live pianist.

Buying has been up at stores elsewhere, such as Bizakis Furs Inc. in Orange, which experienced a 30% increase in January, despite Operation Desert Storm aggression.

“The impression I got from a lot of the people was they figured the war is on, but it’s not going to last too long, and ‘I’ll buy now,’ ” said store owner Theodore Bizakis.

Officials at Gucci, where alligator bags go for $9,000, won’t discuss sales, but receipts at the South Coast Plaza store have dipped only slightly, said a clerk who requested anonymity. Likewise, a salesperson said foot traffic and spending has remained sanguine at Chanel, another ultra-chic fashion and accessory plaza store in the mall where a gold-plated belt with fake pearls costs $885.

There are some reports of pulling back. For instance, more people are entertaining at home, rather than reserving tables for 100 at chic restaurants, some socialites say. Extravagant parties are scarcer, says Steve Paliska, general manager of Allied/Royal Parking, who provides valet parking service for private affairs.

Also, markdowns of up to 70% are everywhere, and stores have had to scramble in other ways just to maintain status quo.

Mary Rubenstein, co-owner of Mi Place in Laguna Niguel and Fullerton, says sales of designer wear have stayed level, but she’s had to work to keep them steady.

“If someone wants alterations immediately, we do it for them. We have clients across the country, and if they call, we send things on a moment’s notice.”

Still, unlike the middle class, which local pawnbrokers say has been hocking belongings with renewed vigor, the rich don’t seem to have been driven to high-ticket pawnshops that cater to the diamond-face watch set.

Business is up at Hock It to Doc by 25% over the same time last year, said owner “Doc” Kilgore.

“I’d accept more if I had more help and more space,” he said.

But “it’s about the same from two years ago,” said Mark Todo, owner of Moboco, an exclusive Newport Beach jeweler whose tasteful newspaper ad seeks “lonely jewelry” to buy. “I haven’t noticed business executives selling their Rolex watches to raise money for their companies.”

Grafstein & Co., with outlets in Santa Ana, Beverly Hills and New York, didn’t recoup a cent of $10,000 in advertisements soliciting gems and used fine jewelry placed earlier this year in major newspapers, owner Carl Marcus said.

“We had arranged a $250,000 line of credit expecting to use that much to buy, but we didn’t touch a penny of it,” Marcus said. “In the 1982 recession, we used up almost $200,000 in buying by running the same types of ads.

“Also, as for sales, we enjoyed the best January and February in four years. My dad always used to say the rich are always spending--sometimes you just have to squeeze a little harder to get the money. He was right, I guess.”