The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
ARTEIXO, Spain — Sometimes good just isn't good enough.
Zara owner Inditex SA fell the most in six months Wednesday after Morgan Stanley analysts cut their recommendation to underweight from equalweight and reduced their price target for the stock to the lowest among analysts tracked by Bloomberg. Inditex dragged European retailers lower, making the sector the worst performer in the broader regional index.
“Inditex is still a world-class retailer, but its investment proposition has been weakening for some years,” analysts Geoff Ruddell and Amy Curry wrote in a note to clients. “And we don’t think that is properly reflected [yet] either in consensus estimates or the multiple the market is applying to them.”
Inditex is still a world-class retailer, but its investment proposition has been weakening for some years.
The bank cut its price target for Inditex to 21 euros, the street low, as it slapped its first ever underweight rating on the stock. Analysts have pared their 12-month targets from a consensus of 35 euros at the start of the year to 31.10 euros in August.
ADVERTISEMENT
The Morgan Stanley analysts applauded Inditex’s “fantastic” long-term performance in opening more than 6,000 stores and expanding into 63 additional countries since its 2001 initial public offering, but issues have been gradually building, they wrote in a note entitled “Going from Great to Good.”
Zara’s owner is increasingly mature, with new space likely to contribute less to sales growth in the future. And it won’t be immune to cost pressures from online sales, Morgan Stanley said in the note. Inditex reports first-half earnings September 12.
By Macarena Munoz, with assistance from Lisa Pham and Hanna Hoikkala. Editors: Beth Mellor, John Viljoen and Celeste Perri.
In 2020, like many companies, the $50 billion yoga apparel brand created a new department to improve internal diversity and inclusion, and to create a more equitable playing field for minorities. In interviews with BoF, 14 current and former employees said things only got worse.
For fashion’s private market investors, deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry, reports The State of Fashion 2024.
A blockbuster public listing should clear the way for other brands to try their luck. That, plus LVMH results and what else to watch for in the coming week.
L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.