Thursday, 23 June 2022 11:32
Although people often associate the financial world with black suits, statistics and little in style, trading has its modern side.
In particular, fashion stocks. From top brands like Christian Dior and Ralph Lauren to high-street brands like Gap and Zara, retail stocks have been firmly on the radar of investors lately.
Just yesterday, Mike Ashley’s Frasers Group confirmed it had increased its stake in luxury German fashion brand Hugo Boss, once again, raising its interest rates to 4.9 percent, with options to buy over an additional 26 percent of the stock.
As 90s brands gain a second wind of popularity, this trend is not limited to the fashion-conscious.
PVH Corp., whose main products are top fashion brands Calvin Klein and Tommy Hilfiger, is the only share in the fashion industry that has operated positively since the beginning of the year, according to CMC Markets, which it shares exclusively with City AM today.
With an increase of 11.2 percent since the beginning of the year, the group also recorded $ 9.2 million in revenue last year. Other luxury brands such as LVMH or Dior recorded a decline in stock value of -17.4 percent, or -19.1 percent since January 2022.
Does High Street Fashion Have Better Results?
In short, no. Since the beginning of the year, companies such as Nike, Zara, Next or H&M have recorded an average share price reduction of 31.37 percent.
JD Sports fell the most with a 44.8 percent drop in stock price, not far from the gap, to -42.68 percent to date.
Next has the lowest share price drop at just over 21 percent. The closure of retail stores that were not necessary during the pandemic had a significant impact on high-street fashion brands as well as online retailers, which led to the British giant Missguided having to enter the administration.
However, with the reopening of stores in April 2021, high street fashion was expected to return. Or is too much lost on the profits of online fashion retailers?
Fashion retailers
With luxury and high fashion stocks declining, an increase in online retail would make someone think that online retailers are in better shape.
However, when looking at In The Style, Boohoo and ASOS, the results follow a trend in other fashion markets. While In The Style is “only” 4.35 percent lower than the start of 2022, Boohoo and ASOS recorded stock price declines of -33.12 percent and -37.16 percent, respectively.
This begs the question, is there a change of focus in the fashion industry from a customer perspective?
Aside from stock performance, what do consumers actually look for when buying new clothes?
Google Trends search has shown that in the last 10 years, fast fashion has doubled the interest in the minds of consumers, resulting in a reduction in both high and luxury fashion.
Moreover, sustainable fashion has also risen in interest, which has jumped from 6 percent to 24 percent over a 10-year period.
With sustainable fashion becoming the $ 8 billion market by 2023, is it time to start trading in this sector? Having said that, it should not be forgotten that both Allbirds and thredUP have seen their shares fall by over 60 percent since January 2022.
