Bain & Co., a leading consulting firm, estimates that luxury goods sales will fall 20% in the first half of 2009 before stabilizing in the second half. In all, Bain expects luxury goods sales will fall 10% for the year. In October, Bain was forecasting a drop of just 7%, but conditions have deteriorated quite a bit since then.

The Wall Street Journal reports (subscription required) that "The U.S., which accounts for roughly a third of luxury-goods sales, is one of the worst-hit markets. Bain expects U.S. sales of high-end clothing, accessories, tableware, cosmetics and jewelry will drop by 15% this year. That compares to expected sales declines of about 10% in both Europe and Japan."

Every so often, when time and the environment take their toll, my wife goes shopping for a new purse. Although she avoids heavily labeled items, she is occasionally tempted by the rows of fake Prada, Louis Vuitton, and Gucci purses offered by our local sidewalk-based merchant. While designers might disagree, my wife (like many others) sees cheap bags as a harmless bit of fun, a little bit of playful fake prestige that she can pick up for less than the price of a steak.

Last year, however, a Canadian con artist was accused of expanding the repertoire of imitation Guccis, offering fake stock options in the the Gucci Group. Claiming that he was a member of the Gucci board and was tasked with creating an influx of cash, Timothy Khan sold over $7 million in nonexistent Gucci stock in 1995. By 1996, the investor who had purchased the counterfeit stock was demanding that Khan sell it. Offering a variety of excuses, backed up by a variety of seemingly official documents, Khan held on to the investor's money for a further eleven years. On March 19, Khan pled guilty to two counts of securities fraud and wire fraud. Each count carries a maximum sentence of twenty years in jail, and Khan's sentencing is set for June and will be held in Manhattan federal court.

Suddenly, a $20 knockoff purse doesn't seem like such a big deal!

Last month there was speculation that Prada would put off its much-anticipated IPO in light of consumer confidence concerns and weakened investor interest in retail-related companies.

But now Gaetano Micciche, head of Intesa Sanpaolo's corporate and investment banking division, which is managing the IPO, says that the company will push forward with its IPO plans: "To list we will pick the right moment for the operation to be a great success, as the company, I believe, deserves. No delays."

Back in January, I wrote this about about Prada's IPO plans:

Assuming that Prada's IPO plans are indeed unfazed by the luxury market bloodshed, there are two possible scenarios:

1. Prada plans to go ahead with a June IPO because it believes the market will be kinder to luxury goods stocks by then, which would be bullish for the industry now.
2. Prada plans to do the IPO in June because raising money after that will only be more difficult.

Shares of leading luxury couturier Coach (NYSE: COH) have rebounded to right around where they opened this year. This is after Coach shares had a disastrous start trading down about 20% in the first few weeks of January. Investors may be betting that international growth will compensate for any softness in the U.S. luxury market.

Prada's plans to press on with its IPO plan probably signals bullishness that the market will be kinder in June -- and that's good news for investors looking at other luxury retailers.

With luxury stocks off to a horrific start to the year -- Coach (NYSE: COH) and Tiffany (NYSE: TIF) already down in the neighborhood of 20% -- this might seem like a strange time for Prada, one of the world's top high-end fashion houses to take itself public.

But according to the Wall Street Journal, Prada's IPO is still scheduled [subscription required] for June. Miuccia Prada and her husband, Prada CEO Patrizio Bertelli, own 95% of the company, and had previously said that market conditions would be a factor in the timing of the IPO.

Assuming that Prada's IPO plans are indeed unfazed by the luxury market bloodshed, there are two possible scenarios:

1. Prada plans to go ahead with a June IPO because it believes the market will be kinder to luxury goods stocks by then, which would be bullish for the industry now.
2. Prada plans to do the IPO in June because raising money after that will only be more difficult.

Remember -- the insiders at Prada have a better read on this market than just about anyone, and the IPO schedule/details are an important barometer of the industry's health.

Eric Buscemi reported some "shady" news from the world of fashion earlier today, as Italian company Luxottica Group SpA (NYSE: LUX) has made a $2.1 billion bid for U.S. sunglasses manufacturer Oakley (NYSE: OO).

Luxottica already has the Prada and Ray-Ban brands under its umbrella, so adding OO, which offers an upscale line of high-performance sunglasses and goggles, seems like a shrewd and sensible move. It seems as though the collective's primary "competition" these days is the man on the street ... quite literally!

Oakley is one of those brands, like Prada - or Coach (NYSE: COH) - of which poorly fashioned knock-offs are easily found lining the street corners of major cities. A little haggling, some sweet talking, and the right amount of cash can outfit a New York City or Las Vegas tourist with the cream of the fraudulent crop.

My husband's stepfather was once given a pair of Oakley sunglasses, which he thought to be genuine product until closely examining the "brand" name that read... O4kely. Whoops. You get what you pay for, and eyeglasses are more fragile - and more vital - than handbags, so those looking for quality will continue to pay for it. And in my experience (and my stepfather-in-law's), once you've had one knock-off, you're not likely to continue the ruse. The combined cache of these brands should make Luxottica quite the name to be reckoned with in the trendy eyewear industry.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

I like to call them "superphones" but the industry phrase is "smart phones," and the best of the bunch still exist in our collective imagination and in sparkling light-on-black press photos on the internet: the Apple iPhone (due out June 29), the LG Prada ("late summer") and the Foleo, a companion to the Palm Treo (more "late summer").

While many of the details are known, of course, I haven't actually touched any of these superphones. But that's part of the deliciousness. I can already tell you which one I want to have in my big purple knitted bag immediately (the iPhone) and which I'm fine admiring from afar, and on the cover of US Magazine (LG Prada) and which I might only buy if I was far more idle and in possession of way more disposable income than I now have (Palm Foleo).

Face it: the LG Prada phone is not about utility. The Prada phone is all cool. That said, it seems to have lots of the same great features of the iPhone: the nice high-res camera, the touch screen, the pretty sleek shape. It does e-mail and IM and music and internet, all with space-agey sounds.

But how does it rate?

What is it? The LG Prada is a mobile phone that you can also use as a prop for photo shoots when you and your 105-pound friends are putting together your runway portfolios (score two cool points). And, as a bonus, you can take photos for said portfolios, and then set them as your wallpaper with the cool click of your French-manicured finger. Like the iPhone, it plays music and movies (score two cool points), it takes photos (score one each on usefulness and coolness), it has a touch interface (another point each for usefulness and coolness).

How much? It's certain that the LG Prada will be offered over the Verizon (NYSE: VZ) network, although it's not certain how much it will be in the U.S. In Europe, the phone is selling for (about) the equivalent of $800, so we'll go with that: $800.

I know, you're all waiting eagerly for the release of the iPhone, Apple Inc.'s (NASDAQ: AAPL) long-awaited mega phone. Or maybe you've decided you're an upscale type and are willing to wait even longer for the U.S. release of LG's Prada phone (currently sold in Europe for about $800 USD, and to be offered on the Verizon (NYSE: VZ) network), expected in "late summer" 2007. Didn't you realize there's a third option for the status-hungry, dripping-with-money types?

For only $300,000, or thereabouts, you could be dripping in mobile phone-ness with the Vertu "Signature Cobra," pictured here. Only eight of the phones -- encrusted with 439 rubies and wicked emerald cobra eyes -- will be produced, but you'll have to special-order. Vertu is known for its excessively fashionable technology; its phone service features a "concierge" button which connects you to personal assistance for travel, restaurants, and events.

While the concierge sure beats the Apple iPhone's ability to Google "Starbucks" and then call and order 4,000 lattes (haha Steve! you're such a funny one), I think I'd rather have yummy technology than eye-popping jewelry. And wouldn't it suck if you left your phone in a cab?

Move over Coach (NYSE: COH). Prada may be planning its own IPO. According to the Financial Times, CEO Patrizio Bertelli has hinted that the Prada could go public in the next year, and it's currently looking for an investor relations director.

The Italian company may need the cash to expand aggressively into China, Brazil, and India, as well as to increase its presence in the United States and in Japan. Based on its sale of 5% of the company to Intesa Sanpaolo last year, the company is worth at least $2.7 billion. Given sales of about $1.9 billion in 2006, that would give the stock a pretty conservative price/sales multiple.

Considering the recent strength of Coach, this is an IPO that investors would probably be hungry for -- I may have to buy my mother a few shares. If you're going to invest in fashion and apparel stocks, I think the high-end names are the way to go. Companies like Crocs (NASDAQ: CROX) that don't have strong, established brands could see their competitive advantages wane as competitors move in in search of their high margins. Prada seems to have a pretty good moat.

This week, LG Electronics (based in South Korea) is getting a bit more fashionable. The company is going to launch a sleek new cell phone. In fact, it is without buttons, as is the case with Apple, Inc.'s (NASDAQ:AAPL) new iPhone. But, instead of creating a new brand, LG is teaming up with Prada.

I had a chance to interview Donna Flagg, who is a branding expert and the CEO of The Krysalis Group. According to her:

"It makes perfect sense for Prada to extend into cell phones because the strength of their brand is in accessories, and in today's times the cell phone has become perhaps the ultimate accessory. And since Prada typically appeals to a post-college customer, what better way to attract younger generations than to make their most valued possession (or one of them at least) into a status symbol at the same time. In fact, technology is to kids what designer labels were to their predecessors - it's a part of how they identify themselves. And unlike fashion labels, technology, especially cell phones, appeals to both genders equally. So as a move, conceptually, it's a good one. But all of that being said, they are competing with iPhone, so aside from the prestige label, the design has to measure up to the $700.00 price point and compete with Apple's ability to produce extremely well designed products."

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.