Fashion

Ted Baker is stuck in a bear hug trap

4 December 2018

Ray Kelvin’s habit of embracing employees has become a liability for investors. If an internal probe shows he is culpable of more than unwanted coziness, the fashion brand could push its largest shareholder away. Even if he holds on, Ted Baker will grapple with other challenges.

New threats cloud Benetton’s lasting legacy

23 October 2018

Gilberto Benetton led the Italian group’s diversification from garments into concessions. His vision protected the business from the threat of globalisation. But even seemingly stable assets like infrastructure, as the Genoa bridge tragedy shows, can hide great perils.

ASOS’ fast-fashion surge lacks high-end profit

17 October 2018

The internet retailer’s shares rose 12 pct after it beat forecasts, and touted its “huge” potential. But more profitable own brands made up a smaller proportion of its sales, and new ranges such as a gender-fluid style are cheaper. Competition in online retail is huge too.

H&M gets too much credit for a patchy new look

27 September 2018

A glitchy supply chain sent the 23 billion euro fast-fashion retailer’s pre-tax profit down a fifth in the third quarter. Strong online demand was a rare bright spot. Investors who bid up the stock 10 percent ignore high levels of unsold stock and sales growth well below targets.

Versace gives Blackstone a suitably flash exit

24 September 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.

Farfetch IPO carries luxury price tag

6 September 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.

Prada’s hottest trend is investor FOMO

1 August 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.

Aging fashion labels battle in bargain basement

2 July 2018

The founder behind Perry Ellis wants to take the clothing company private. An interloper that licenses brands for accessories is offering investors a premium – all of 50 cents a share. When the target is a grab bag of department-store merchandise, upping the ante is cheap.

Chanel lifts lid on impressive treasure chest

21 June 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 June 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.

Latest M&S overhaul lacks a clear price tag

23 May 2018

The UK retailer will close 100 stores in an attempt to reverse falling like-for-like food and clothing sales. The revamp, sped up by new Chairman Archie Norman, set the group back half a billion pounds last year. With few details about future costs, investors can shop elsewhere.

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.

Private equity’s retail fix risks landlord revolt

5 April 2018

Ailing UK food and fashion chains like private equity-owned New Look or Prezzo increasingly use fast-track insolvency tools to scotch costly leases. The fad gives companies a shot at recovery, while avoiding a risky administration. But property groups may tire of taking the pain.

Inditex still deserves its fashionable premium

14 March 2018

Zara’s owner plans to open less new space as purchases shift online, and overall sales growth slowed in its fourth quarter. But web-based sales are strong, and peers are struggling more. It’s trendy to be down on retailers, yet Inditex merits its valuation lead.

Adidas catchup race has further to run

14 March 2018

The shoemaker’s shares have outpaced Nike and Puma during a global sportswear boom in the last three years. However, they still trade at a discount to main rivals, despite faster revenue growth and improving margins. Hitting new, higher targets should help Adidas close the gap.

Prada’s valuation is fancy even in luxury land

12 March 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.

Equity #MeToo risk is more than a crapshoot

6 February 2018

Allegations like those made against founders of Guess jeans and Wynn Resorts are impossible to predict. But some industries may be more at risk of sharp, reactive share declines when claims surface. A filter might show gambling and fashion as vulnerable - but finance, too.

H&M’s unfashionable stock demands total revamp

31 January 2018

The retailer’s operating profit fell by a third in the fourth quarter and operating margin has more than halved in a decade. Its valuation has fallen toward that of dowdier peers. Stopping the rot will at the least require an aggressive online strategy and more store closures.

Bull market lets activists see virtue in passivity

26 January 2018

Bill Ackman, who lost his fight with ADP, has taken a stake in Nike but isn’t pushing for change. Dan Loeb sat back as Honeywell’s new boss ignored his advice and beat his targets anyway. Even pushy hedge funds can be tempted to simply ride the waves when a rally lifts all boats.

Burberry’s upward mobility has limits

9 January 2018

The 7.5 bln pound British brand hopes a move upmarket will boost its low operating margins. Gucci, for one, turned itself around by ending most discounts and investing in stores. Burberry is priced to succeed, but a less profitable product mix could be a check on its ambitions.