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London Fashion Week concluded last week, and guess what? Apparently, pleats, barn jackets, and sporty chic are all the rage.
Street fashion brands are also back in style, based on their share price performance, while the big catwalk heavyweights look like they’re about to face time in the shadow of its lower price competition.
Luxury brands fell 8 percent last year, according to Etoro data, while shares of big brands rose 21 percent in the last 12 months.
Walk of shame? Burberry shares have fallen 72 percent over the past five years.
Etoro compiled two equally weighted baskets of stocks, one made up of luxury brands, while the other is populated by high street brands.
The worst-performing luxury brand, Burberry, has lost 69 per cent in the past year and 72 per cent in the last five, having recently been kicked out of the FTSE 100.
In a “disappointing” first quarter, the company saw its store sales fall 23 percent in the Americas and Asia Pacific and 16 percent in the EMEA region and India.
Others in the luxury basket, however, have made considerable gains in recent years, with Hermes up 207 percent since 2019 and Brunello Cucinelli gaining 184 percent.
Another big winner was Prada, which is up 126 percent in the last five years.
Etoro analyst Sam North said: “Make no mistake, investing is a long-term endeavor and over the past five years, those who invested in luxury brands will be much happier than their peers who own shares in big names.”
In fact, Etoro’s luxury basket has grown an impressive 58 percent over the past five years, compared to 32 percent growth for the Stoxx 600 index and 11 percent for London’s FTSE 100.
In comparison, the high street basket failed to even match the Footsie, growing just 10 per cent over the period.
“The luxury fashion sector was better equipped to deal with the cost of living crisis as its customers were less sensitive to economic uncertainty compared to price-sensitive high street shoppers and LVMH, Hermès and others really took advantage of this,” North said. aggregate.
Despite this, Prada has gained 13 percent in the past year. The Italian brand Brunello Cucinelli, which has risen the most in this period, has grown by 14 percent.
On the other hand, some long-term winners have seen their shares fall over the past year, with Christian Dior and LVMH falling 19 percent and 17 percent each last year.
North said: “Luxury brands have been a bit on the ropes this year, but this could all change if China’s economy starts to pick up steam again.” However, while a rebound in demand could offer a lifeline, it is crucial that these brands fully understand the evolution of their customer base.”
| the last year | 1 year | 5 years | |
| LVMH | -19% | -17% | 65% |
| Hermes | 1% | 12% | 207% |
| Richemont | -2% | -2% | 54% |
| Kering | -44% | -49% | -52% |
| christian dior | -20% | -19% | 39% |
| moncler | -13% | -12% | -48% |
| Prada | 17% | 13% | 126% |
| Burberry | -58% | -69% | -72% |
| Brunello Cucinelli | -8% | 14% | 184% |
| Hugo Boss | -43% | -36% | -22% |
| the last year | 1 year | 5 years | |
| Inditex | 33% | 48% | 86% |
| H&M | 3% | 11% | -5% |
| Next | 24% | 38% | 68% |
| JD sport | -7% | 3% | 5% |
| Zalando | 29% | 31% | -33% |
| LPP | -13% | 0% | 68% |
| Asos | 1% | 12% | -82% |
| ABF | -4% | 11% | 0% |
| SMCP | -32% | -40% | -82% |
| OVS | 29% | 48% | 81% |
However, while luxury stalwarts face a tough patch, high street competitors have been on the rise.
It is true that the progress of these companies is slow, but having gained 21 per cent, the high street brands have outperformed the growth seen by the Stoxx 600 and the FTSE 100 in the same period.
So far in 2024, major brand names have gained 9 percent, slightly above the two indexes’ gains of 7 percent and 8 percent.
The biggest gainer among high street brands, Inditex, is up 48 percent in the past year, and more recently its profits rose 10 percent thanks to strong performance over the spring and summer.
Sales of its biggest brand, Zara, rose 5.4 percent in the first half alone.
Italian brand OVS also rose 48 percent last year.
Both companies have experienced strong growth in the last five years: Inditex grew by 86 percent and OVS by 81 percent.
Next, which has moved seamlessly into online sales in recent years, is up 38 per cent in the past 12 months, and recently raised its pre-tax profit forecast to £995m, up from £980m , as it said it plans to shift toward stocking fewer, higher-quality items in hopes of attracting wealthier shoppers.
Next up is a 68 percent increase over the past five years.
Zalando is up 31 percent in the past 12 months, while H&M, Asos and ABF, which owns Primark, have posted more modest gains.
However, Asos and SMCP have fallen 82 percent over the long term.
North said: “Reducing inflation and cost pressures appear to be sparking a resurgence among some of the biggest names in the sector, such as Inditex, Zalando and OVS.” Although the image is not black and white.
‘Brands such as ASOS, Superdry, JD Sports and SMCP have continued to struggle since the pandemic, with changes in shopping habits and fashion playing a role.
“Some of these struggling companies could look across the pond for inspiration to firms like Abercrombie, which have turned things around by going back to basics, saving costs and better understanding their customers.”
Abercrombie shares have risen 170 percent in the past year and more than 800 percent in the past five.
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