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Vaccine Optimism Boosts Luxury

Data from an Israeli study that showed vaccines’ effectiveness is curbing the coronavirus pandemic gave luxury shares a welcome shot in the arm this month.
Coronavirus vaccine
Coronavirus vaccine. Getty Images. (MIGUEL MEDINA)

Covid continued to dominate news headlines this month with an Israeli study, the first of its kind, underscoring the effectiveness of the vaccines in preventing infection. Positive news from the Biden administration in accelerating the vaccine rollout in the US, as well as the success of the UK’s vaccination programme added further hope that the pandemic will eventually be brought to heel.

Hermès and Moncler’s quarterly results hewed to a familiar pattern, with revenues soaring in China. Moncler notably pointed to triple-digit revenue growth in the country in February, driven by the holiday spending for the Lunar New Year. Meanwhile, Hermès saw revenues in Asia grow by 47 percent in the last quarter of 2020. Full-year revenues dropped by 6 percent at Hermès and 11 percent at Moncler, versus Bain’s estimated industry-wide contraction of 23 percent.

Elsewhere, Kering’s dependence on Gucci came under the spotlight as the group posted a sales decline of 18 percent in 2020. Gucci contracted by 23 percent during the year and, more importantly, by 10 percent in its final three months. The brand had been on a winning streak, with revenues more than doubling and profits more than trebling between 2015 and 2019 thanks to its hugely successful makeover under designer Alessandro Michele.

LVMH-backed fund L Catterton had a busy February, acquiring a majority stake in Birkenstock (with the Arnault family directly participating as well) and leading a $115 million series B capital injection into Savage x Fenty, Rihanna’s disruptive lingerie brand. LVMH struck a deal with Jay-Z to acquire a 50 percent stake in his Armand de Brignac champagne brand, but agreed to put its fashion venture with Rihanna on hold “pending better conditions.”


Estée Lauder paid a cool $1 billion to increase its stake in Toronto-based Deciem Beauty Group from 29 percent to 76 percent. Deciem’s flagship brand, The Ordinary, has shaken up the industry by offering affordable skincare products under a direct-to-consumer model.

Also in skincare, South Korean manufacturer of skincare, makeup and fragrances Skin n Skin Co. was acquired by The Pyunhan Co., a South Korean personal care group.

Lastly, US luxury watch e-tailer Hodinkee acquired Crown & Caliber LLC, a US-based online marketplace for luxury pre-owned watches.

The Savigny Luxury Index (SLI) gained over 6 percent in February, outperforming the MSCI by almost 4 percentage points.

SLI versus MSCI

SLI Graph February 2021
SLI Graph February 2021 SLI Graph February 2021

Going Up

  • American luxury stocks topped the leaderboard this month, spurred by Biden’s handling of the coronavirus pandemic. Tapestry led the pack with a 33 percent share price increase, followed by Estée Lauder at 21 percent, Ralph Lauren at 16 percent and Capri Holdings at 12 percent.
  • Moncler and Hermès both saw share price increases in the region of 10 percent in February following solid results announcements by both companies.

Going Down

  • Whilst most stocks ended the month in positive territory, Italian stocks tended to be the poorest performers out of the SLI, no doubt hampered by domestic political turmoil, which may have contributed to the country’s losing battle with the coronavirus. Prada was the worst performer out of the bunch, losing almost 4 percent of its value.
  • Kering was the only stock other than Prada to end February in negative territory, with a 3 percent drop in share price driven by its results, and notably the underperformance of its flagship (Italian) brand Gucci.

What to Watch


We have talked ad infinitum about China, but there is another dragon economy worth mentioning: South Korea. Just look to the slew of K-pop stars partnering with luxury brands for evidence that the sector has its eyes on the country for home-grown talent and representation. Examples include Blackpink’s Lisa representing Celine and Bulgari, Exo’s Kai modelling for Gucci and Red Velvet’s Irene representing Prada. There has already been a wave of interest in Korean skincare; now Korean fashion is taking centre-stage. “Concept Korea” hosted a digital fashion show at New York Fashion Week this month, showcasing Korean designers against a backdrop of art and musical performance. We look forward to more representation of Asian fashion in the West going forward.

Sector Valuation

SLI Table February 2021
SLI Table February 2021 SLI Table February 2021

Pierre Mallevays is a partner and co-head of merchant banking at Stanhope Capital Group.

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