LONDON, United Kingdom — The Savigny Luxury Index ("SLI") continues its rise, progressing by two and half percent in March in line with the MSCI World Index ("MSCI"), driven by strong results announcements and an uptick in M&A activity.

Big news

• The euro's weakness is benefiting the luxury goods industry, but also creating important discrepancies to which luxury groups are responding with unprecedented price adjustments in a bid to counter a fast developing grey market. Chanel led the charge by lowering prices by more than 20% in China whilst increasing European prices across the board by approximately the same percentage.  Similar price increases in Europe and price decreases in Asia are expected of all the major brands, albeit with a lesser quantum as the local European clientele remains fragile.

• During Baselworld, Tag Heuer, Bulgari and Gucci all announced partnerships with technology companies to develop hybrid watches that would combine traditional watchmaking with digital know-how and wireless connectivity.  These technology deals could be seen as a way for watchmakers to hedge their bets ahead of the release of the Apple watch and the smartwatch phenomenon in general.  Traditional watchmakers such as Breguet and Patek Philipe said that smartwatches were incompatible with their brand values and the timelessness of their products.

• M&A activity has picked up:  Italian private equity firm Clessidra finally acquired Roberto Cavalli in a management buyout – the company was valued at €400 million, a brutal discount to the €1 billion plus price tag touted a few years back; Interparfums acquired French fashion brand Rochas from P&G for $108 million; and last but not least, the Italy-based fashion online retailer Yoox merged with online luxury retailer Net-a-Porter to create the world's largest online luxury ecommerce platform, valuing Net-a-Porter between €1.3 and 1.5 billion, a multiple of up to 2x sales.  Richemont will retain a 50% stake in the merged entity. Some new kids on the block also received investment: Peter Pilotto opened up its capital for the first time to Megha Mittal and MH Luxe and online retailer Farfetch raised another round of investment, valuing the company at $1 billion.

Going up

• Moncler shares leapt up almost 16 percent after it posted a double-digit profit jump, driven by new shop openings.  The company also said that it had already secured twenty locations for new shop openings in 2015, making it the only luxury outdoor/ lifestyle brand with a truly global footprint.

• Hermès jumped by almost 14 percent after announcing strong full-year results, a dividend hike as well as a one-time additional payment to investors.

• Salvatore Ferragamo's share price rose 10 percent, boosted by better than expected profit growth and a great start to 2015.

Going down

• Shares in Brunello Cucinelli slumped almost 12 percent after it forecasted a lower core profit margin for the current year, due to rental costs rising faster than expected.

• Tod's fell more than seven percent as comparable sales in the first quarter continued to be hit by weak Chinese consumer spending and cold weather in North America.

What to watch

The Net-a-Porter and Yoox merger has created an industry leader in the booming online luxury market, with combined sales of €1.3 billion.  This deal highlights the strategic importance of the internet in driving future sales, particularly among the so-called millennials.  There is still room for growth in sales and in profits amongst the players:  the internet only accounts for five percent of global luxury sales and Yoox Net-a-Porter’s operating margin is only 5 percent, relative to 20 to 25 percent for most big luxury brands.  However, the merger is expected to lead to a profitability increase for the newly-created online luxury champion, with sales and operating synergies such as warehouse costs, logistical, back-office and distribution costs.