Seasonal trends control many stocks, and alongside the likes of travel and tourism’s summer peaks, we can view fashion stocks as opportunities that can present themselves during the global Fashion Week season.
Between February and March, the fashion world is captivated by catwalks throughout New York, London, Milan and Paris as leading designers showcase their styles for the year ahead.
For investors, this can offer plenty of opportunities to view which stocks are ramping up their ambitions or are looking to innovate into new niche sectors. Furthermore, reviews and responses can provide plenty of fundamental analysis into the biggest winners and losers at events–which could impact stock performance throughout 2024.
One of the key advantages of fashion stocks is that many of them operate away from Wall Street and the U.S. exchanges, which helps investors diversify their portfolios on an international basis. Although it can be tricky to manage stocks across international markets, digital transformation in wealth management is making it easier to unify internationally-focused portfolios while keeping global stocks manageable.
With a busy 2024 Fashion Week season coming to an end, let’s take a moment to explore some of the biggest winners from this year’s events:
Louis Vuitton (LVMUY)
On a technical level, the good news for Louis Vuitton owner LVMH (OTCMKTS:LVMUY) is that fears over the impact of the cost-of-living crisis hampering luxury sales have subsided following strong Q4 results.
Having reported a 10% increase in organic revenue in Q4 2023, LVMH also saw 13% growth over last year to report sales amounting to $93.34 billion. This figure comfortably exceeded forecasts for the luxury conglomerate from analysts who expected the sales to struggle amid an unfolding cost of living crisis.
This welcome boost to sales growth at a time when luxury goods were expected to struggle helped to bring new resonance to Louis Vuitton’s performance at Paris Fashion Week, in which the fashion house showcased an Autumn/Winter collection led by creative director Pharrell Williams. The collection focuses on America’s old West and pays tribute to Native Americans and black cowboys.
LVMH has enjoyed a strong start to 2024, and its stock has climbed more than 17% with positive sales figures and a strong impression in Paris forming a catalyst for greater optimism surrounding the stock.
Hermès (RMS)
It appears that buoyant luxury sales reached Hermès (EPA:RMS) stock, too. The fashion house reported a strong end to 2023 that beat expectations. With sales increasing 18%, the impressive performance has seen the firm’s stock rally more than 21% in 2024 so far.
Challenges appear to be mounting for Hermès however, and CEO Axel Dumas announced recently that price rises of 8% or 9% were on the way to keep up with inflation.
There are also concerns among analysts that Hermès stock is among the most expensive throughout the sector, with a price-to-earnings (P/E) multiple of 48x. This is more than double the fashion industry’s average of 21x.
Despite concerns about the stock becoming overweight, it’s worth noting that Hermès is still trading below its five-year average, and its introduction of a more subtle luxury line in Paris this spring could help to capture the zeitgeist well as economic pressures and geopolitical tensions could impact more expressive tastes this year.
“We think Hermes has a major long-term potential to extend its product range and exposure to a number of verticals,” explained Morgan Stanley analysts in February. Following the debut of a makeup range at last year’s Paris Fashion Week, it’s clear that Hermès has its sights set on innovation.
Moncler (MONC)
It’s already been a statement year for Moncler (BIT:MONC). Although the stock didn’t quite take to the traditional catwalks of New York and Paris to kick off their autumn/winter collection, the fashion house brought plenty of star power to St. Moritz to celebrate the brand’s mountaineering heritage.
With the likes of Kate Moss and Anne Hathaway leading the front row, Moncler made a big statement for the year ahead by combining functional outerwear with high fashion.
These big statements may well have been supported by the news that Venezio Investments, holding of Temasek, Singapore State investor fund, is set to become a direct shareholder in Moncler.
News of Singaporean interest in Moncler, combined with its quality efforts in St. Moritz in February, has helped the stock to climb nearly 15% in 2024 so far, and this places the stock in good stead for a prosperous 2024.
However, investors may need to temper their optimism for Moncler. The outlook for the designer wasn’t as rosy in Q3 2023, and a revenue slowdown from 26% to 7% between the second quarter and third quarter last year highlights that lingering high inflation could hinder the stock’s progress moving forward.
On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
