Luxury Goods

Gucci owner is unreliable beacon for luxury sector

24 Oct 2018

Kering’s upbeat view on Chinese demand sparked a rally in high-end stocks. But the group has so far been less vulnerable to economic swings than rivals thanks to its social media savvy. And the outlook for spending may be less rosy if China’s consumer confidence is any guide.

China worries give luxury investors excuse to sell

9 Oct 2018

Reports of stricter customs checks on Chinese tourists returning from the week-long national holiday triggered a selloff in luxury stocks. Government curbs are nothing new. But the sector’s high valuations make shareholders nervous about any sign of weaker demand from China.

Versace gives Blackstone a suitably flash exit

24 Sep 2018

Fashion group Michael Kors may pay 2 billion euros for the Italian label. The deal adds a high-profile name to CEO John Idol’s growing stable of luxury brands, but may take years to pay off. Minority investor Blackstone has stitched together a clean sale, and respectable return.

Aston Martin IPO makes more sense in middle lane

20 Sep 2018

The high-end carmaker is aiming for a top equity value of 5 billion pounds. That would place the group above the average of luxury peers and near snazzier rival Ferrari in EBITDA multiple terms. The midpoint of the proposed IPO range looks more reasonable.

Richemont’s board is as complex as its timepieces

10 Sep 2018

The $44 billion Swiss watchmaker appointed a CEO just two years after scrapping the role. But new boss Jérôme Lambert won’t lead Cartier and Van Cleef - brands that generate 80 percent of operating profit. Fuzzy governance will continue to weigh on the group’s value.

Farfetch IPO carries luxury price tag

6 Sep 2018

The deluxe clothing website may be valued at $4.6 billion. That makes sense if it can outgrow rivals. A model that links buyers and boutiques potentially means higher profit, but gives it less control over stock and prices. Well heeled customers may be tempted to go elsewhere.

Aston Martin IPO relies on turbo-charged profit

29 Aug 2018

The British luxury sports-car maker wants to list in London. Promises of Ferrari-like profitability and rapid growth could easily justify a more than 5 bln pound valuation, but look a stretch after this year’s flat margin. Investors will want more clarity on Aston’s growth path.

Mulberry hits every luxury branch on the way down

20 Aug 2018

Almost three-quarter of the bagmaker’s sales are in the tough UK market. That, and a costly push into Asia amid the threat of a China-U.S. trade war, explains why Mulberry’s shares are down 60 pct this year. A fresh hit from House of Fraser’s demise is par for the course.

Luxury investors take benign view on trade wars

3 Aug 2018

A growing spat between China and the U.S. threatens sales in the sector’s two most important markets. A weaker yuan would make overseas shopping pricier for spendthrift Chinese tourists too. With share prices near record highs, investors are exposed to anything but all-out peace.

Prada’s hottest trend is investor FOMO

1 Aug 2018

The Italian label grew first-half sales 9 percent thanks to spruced-up handbags. Operating margins are almost two-thirds below their peak, but a full turnaround is priced in. Fear of missing out on the next Gucci-style makeover makes shareholders reluctant to wait for results.

Burberry spotlights fashion’s burning issue

20 Jul 2018

The brand is under fire for incinerating 29 million pounds of unwanted stock last year. It is unusually transparent about a common practice in the luxury sector. As consumers become more sensitive about carbon emissions and waste, the wider industry can expect greater scrutiny.

Chanel lifts lid on impressive treasure chest

21 Jun 2018

The private luxury brand opened its books for the first time to reveal larger-than-expected sales of $9.6 billion and a plush 28 percent operating margin. The display nixes fears the Parisian label is flagging. Claims it is not preparing for an IPO or sale are less convincing.

Hermes loses niche status in fashion and finance

15 Jun 2018

The fashion group is joining rivals LVMH and Kering in France’s CAC 40 index. The Hermes family must get used to hoi polloi like ETFs and hedge funds crowding into its stock, and tougher disclosure norms. For companies, like luxury handbags, there’s a cost to going mainstream.

Ralph Lauren’s growth track runs through China

12 Jun 2018

The clothier aims to boost revenue by $1 bln by 2023. The 16 percent target seems bold given the label’s recent woes and upheaval in the retail sector. But the quintessential American brand’s provincialism may be its saving grace. It has room to expand in the People’s Republic.

Tiffany revival adds rare sparkle to U.S. retail

23 May 2018

The jeweler’s shares hit a record high after it beat quarterly earnings estimates and upgraded its outlook. New boss Alessandro Bogliolo is finding fresh luster with cost discipline, sharper marketing and new products. It’s a formula other retailers will struggle to match.

Billionaire’s Burberry sale is fashionably early

9 May 2018

The luxury brand’s top investor, a vehicle of Albert Frere, has sold its 6.6 pct stake. It’s an odd move for the typically long-term owner. But Burberry’s valuation rivals peers like LVMH, and boss Marco Gobbetti’s turnaround will be a lengthy process. It’s a good time to exit.

Prada’s valuation is fancy even in luxury land

12 Mar 2018

The Italian brand is trading at roughly the same multiple of expected earnings as super-elite Hermès. Nascent signs of a turnaround after four years of falling sales, especially in its lucrative handbag business, are helpful. But investors are giving credit before it is due.

Luxury companies’ largesse is born of necessity

13 Feb 2018

Kering is joining LVMH in hiking dividends. A 30 percent jump in its cash payout comes on top of the Puma stake that Gucci’s parent is handing over to shareholders. With valuations high and cash piling up, lavish generosity is needed to keep hard-to-please investors happy.

Richemont reversal is unflattering but necessary

22 Jan 2018

The Cartier owner is paying 2.8 billion euros to purchase online luxury retailer Yoox Net-A-Porter, in which it already has a stake. That is a relatively rich price to buy back a business it used to own. The reversal in strategy is embarrassing but probably for the best.

Puma spinoff helps Kering’s race-fitness

11 Jan 2018

Gucci’s parent will hand investors most of its stake in the German sports label, a distribution worth 3.5 bln euros. Offloading the lower-end brand should boost the 52 bln euro luxury group’s value. Kering may even be able to leave behind its traditional discount to rival LVMH.