London Fashion Week concluded last week, and guess what? Pleating, barn jackets and ‘sporty chic’ are all ‘in’, apparently.
Also back in vogue are high street fashion brands, if their share price performance is anything to go by, while the big hitters on the catwalk look set to be facing some time in the shade of their lower-price-point competition.
The past year has seen luxury brands fall 8 per cent, according to data from Etoro, whereas high street stocks have risen 21 per cent over the past 12 months.
Walk of shame? Burberry shares have fallen 72 per cent over the past five years
Etoro compiled two equal-weight stock baskets, with one made up of luxury brands, while the other is populated by those on the high street.
The worst performing of the luxury brands, Burberry, has lost 69 per cent in the past year, and is down 72 per cent over the past five, having recently been booted out of the FTSE 100.
In a ‘disappointing’ first quarter, the firm saw its store sales tumble 23 per cent in the Americas and Asia Pacific and 16 per cent in the EMEA and India region.
Others in the luxury basket, however, have delivered considerable gains in recent years, with Hermes having risen 207 per cent since 2019 and Brunello Cucinelli gaining 184 per cent.
Another big winner was Prada, which rose 126 per cent over the past five years.
Sam North, Etoro analyst, said: ‘Make no mistake, investing is a long-term endeavour and over the last five years, those invested in luxury brands will be far happier than their peers holding shares in high street names.’
Indeed, Etoro’s luxury basket grew an impressive 58 per cent in the past five years, compared to 32 per cent growth for the Stoxx 600 index and 11 per cent for London’s FTSE 100.
In comparison, the high street basket failed even to tally 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, with its customers less sensitive to economic uncertainty in comparison to price-sensitive high street shoppers, and LVMH and Hermès and others really capitalised on this,’ North added.
Despite this, Prada has gained 13 per cent in the past year. The biggest riser in this period, Italian brand Brunello Cucinelli, has grown 14 per cent.
On the other hand, some long-term gainers have seen their shares fall in the past year, with Christian Dior and LVMH dropping 19 per cent and 17 per cent each in the past year.
North said: ‘Luxury brands have been on the ropes somewhat this year, but this could all change if China’s economy begins to gather steam again. However, while a rebound in demand could offer a lifeline, it’s crucial for these brands to deeply understand their evolving customer base.’
| YTD | 1Y | 5Y | |
| 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% |
| YTD | 1Y | 5Y | |
| 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 are facing a rough patch, high street competitors have been on the rise.
Admittedly, the progress for these firms is slow, but having gained 21 per cent, high street brands have risen above the growth seen by the Stoxx 600 and FTSE 100 in the same period.
So far in 2024, high street names have gained 9 per cent, slightly higher than the 7 per cent and 8 per cent gains by the two indices.
The biggest gainer among high street brands, Inditex, has risen 48 per cent in the past year, most recently seeing profits jump 10 per cent on the back of strong performance over the spring and summer.
Sales in its largest brand, Zara, rose 5.4 per cent alone in the first half.
Italian brand OVS has also risen 48 per cent in the past year.
Both firms have seen strong growth over the past five years, with Inditex rising 86 per cent and OVS growing 81 per cent.
High street fixture Next, which has seamlessly shifted towards online sales in recent years, has risen 38 per cent over the past 12 months, recently upgrading its pretax profit forecast to £995million, upwards from £980million, as it said it plans to shift towards stocking fewer items of better quality in the hopes of attracting wealthier buyers.
Next is up 68 per cent over the past five years.
Zalando has risen 31 per cent over the last 12 months, while H&M, Asos and Primark-owner ABF have all posted more modest gains.
Asos and SMCP have dropped 82 per cent over the longer term, however.
North said: ‘Easing inflation and cost pressures appears to be sparking a revival amongst some of the high street’s biggest names such as Inditex, Zalando, and OVS. The picture isn’t black and white though.
‘Brands such ASOS, Superdry, JD Sports, and SMCP have continued to struggle since the pandemic, with changes in shopping habits and fashion playing their part.
‘Some of these struggling companies could look across the pond for inspiration from firms like Abercrombie, which have turned things around by going back to basics, cost saving, and understanding their customer better.’
Abercrombie shares have surged 170 per cent in the past year, and more than 800 per cent over the past five.
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