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.
LONDON, United Kingdom — The Savigny Luxury index (SLI) rose almost 4 percent, in line with the MSCI World Index, thanks to reports of green shoots of recovery in local Chinese spending as well as a more resilient US market.
Big news
Chinese consumers contributed to strong quarterly results announcements from Hermès, Tiffany and Brunello Cucinelli, helping overshadow a continued tough trading environment in Europe ex-London. Nevertheless, more widespread signs of recovery are being felt, with most markets except Japan doing better or in line with previous trends according to a report published by HSBC this month. The fog seems therefore to have lifted on the sector with investors taking long positions in most stocks, with the exception of watch stocks which tend to lag in recovery.
The US market is proving more resilient despite continuing softness in department stores/malls. Having clamped down on discounting and reduced its exposure to department stores, Coach benefited from a 22 percent jump in quarterly profits. Not so for Estée Lauder and Michael Kors who both reported a decline in sales through this channel; in the case of Kors deliberately cutting back on sales to department stores in order to protect its brand equity. Ecommerce has taken a stronghold in the US, with internet sales growing by double digits over the Black Friday/Thanksgiving/Cyber Monday weekend vs the same period in 2015.
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Estée Lauder continued its acquisition spree, signing the biggest deal in its 70-year history with the $1.5 billion purchase of millennial favourite Too Faced Cosmetics. Italian leather-goods brand Piquadro bought 80% of manufacturer Il Ponte Pelleteria; Luxottica bought the remaining 63% it didn’t own of optical chain Salmoiraghi & Vigano. In the digital space, Vente-Privée which now has sales of just over $3 billion, announced that it was looking for acquisition opportunities to grow its market penetration, and Farfetch’s CEO stated that the company will be looking to IPO in the next two to three years.
Going up
Going down
What to watch
Christmas is coming and the signs are looking more encouraging than they were a few months back. All eyes will be on the web, as a growing number of consumers seem to want to shop from the comfort of their sofas. The burning question is not necessarily how much sales will be made but rather at what price will those sales be made and, last but not least, whether returns will continue to rise.
Sector valuation
Chanel, Louis Vuitton and Tiffany & Co are among the brands expanding in Perth, Australia in a bid to tap its mining, oil and gas wealth and newfound status as a travel hub.
This week’s round-up of global markets fashion business news also features Haiti’s sourcing crisis, Brazilian jewellery giant Vivara and Dubai’s Ramadan shopping season.
This week’s round-up of global markets fashion business news also features Supreme’s long-awaited Shanghai flagship opening, India imposes MIP on undervalued imports of synthetic knitted fabric and striking Sri Lankan workers continue to protest.
Imran Amed shares his observations from a trip to the wealthy desert metropolis, home to the most lucrative stores for many of the world’s top fashion brands.