From Morningstar: 2024-11-20 05:06:39

Fashion stocks have plummeted in 2024 after a pandemic boom, with fears of U.S. tariffs on European goods and China’s slowdown contributing to the decline. Luxury brands like LVMH and Burberry have struggled, with LVMH reporting a 3% fall in revenues and Burberry being kicked out of the FTSE 100.

Investors are questioning the viability of fashion stocks, with some experts warning of a long recovery period. Companies like LVMH and Burberry are facing challenges due to weakened Chinese consumer demand and slow sales growth.

While luxury brands like LVMH and Burberry have struggled, Hermes has defied the odds with a strong third quarter performance. The French handbag and scarves group saw an 11% rise in revenues, outperforming its peers. Sales in Japan, Europe, and the Americas all saw increases, except for the watches division where sales decreased. Luxury giants like Hermes and LVMH perform differently in the industry, highlighting the diversity within the luxury goods sector. Brands like Burberry cater to aspirational consumers, while Hermes attracts top spenders. Inditex, owner of Zara, benefits from the luxury downturn with a 29% share price increase in 2024. The fast-fashion brand attracts customers priced out by luxury brands and offers trendy, affordable fashion. As the fashion industry faces a slowdown, investors should consider the long-term benefits of investing in companies with strong moats and pricing power. Shein and Puig are gearing up for potential IPOs in 2025, signaling a return of interest in fashion IPOs despite the luxury slowdown. Puig, owner of brands like Jean Paul Gaultier, faces challenges but its defensive products like makeup and fragrances may fare better than other luxury companies. 1. The stock market saw a significant drop today, with the S&P 500 falling by 2% and the Dow Jones Industrial Average losing over 500 points. This decline was attributed to concerns over inflation and rising interest rates.

2. A new study revealed that over 70% of Americans are experiencing financial stress due to the ongoing pandemic. The research found that many households are struggling to pay bills and are worried about their financial future.

3. In tech news, Apple announced the release of the new iPhone 13, which boasts improved camera features and battery life. The company also unveiled the Apple Watch Series 7, with a larger and more durable display.

4. The United Nations reported that global greenhouse gas emissions have reached record levels, despite efforts to reduce carbon emissions. This increase is largely driven by the industrial sector and the use of fossil fuels for energy production.



Read more at Morningstar: Are Fashion Stocks Too Risky For Investors?