Finally chic again: Fashion stocks: These hip fashion brands are also in | on the stock exchange news
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by Ralf Witzler, Euro am Sonntag
S.Even at board level, the tie has been on the decline for years. With the pandemic, the trend towards casual clothing ignited the turbo. Goodbye to suits and evening wear, bring on the sweatpants. But now that presence at the workplace is desired again, the theater is open, family celebrations are taking place on a larger scale, the return to normality often begins with a questioning look into the wardrobe: What should I wear? For fashion groups like HUGO BOSS, Hennes & Mauritz (H&M) or Inditex, the answer is important. Industry experts expect a backlog of so-called formal wear: a return to the stricter dress code. The trend towards loose outfits and a wide range of possible combinations is still intact.
But the industry is currently moving even more: online trading has been growing for years. According to figures from the Federal Association for E-Commerce and Mail Order, online fashion retail sales in Germany more than doubled from 2013 to 2020 to a good 21 billion euros. Here, too, the restrictions on stationary retail during the pandemic have intensified the trend. According to consumer researchers at GfK, sales in the online fashion retail segment rose by 41 percent in the first quarter of 2021 compared to the same period in the previous year. There was particular demand for comfortable clothing such as loungewear or hoodies.
Online and offline are growing together
It is true that online shopping is likely to decrease again after the inner cities have opened up and that there is a certain amount of catching up to do in stationary retail, says Petra Dillemuth, GfK’s fashion expert. However, it is also to be expected that shopping via the Internet will level off at a significantly higher level than before Corona. Online and offline can hardly be separated in the future.
This is not entirely new for fashion retailers. HUGO BOSS, for example, has posted double-digit growth in online sales for 14 consecutive quarters. For a while now, Metzingen has no longer been on or offline. The company relies on the interlinking of both sales channels and is expanding its online portfolio: by 32 stores last year. In the first quarter of 2021 alone, the presence of hugoboss.com was expanded to a further twelve countries.
The competitors Inditex and, with a little delay, H&M act in a similar way. The US fashion chain GAP, on the other hand, is taking a different course. It has announced that it will close all stores in the UK and Ireland and only sell over the internet.
Daniel Grieder has headed the HUGO BOSS Group since June. The Swiss was most recently head of the fashion brand Tommy Hilfiger. He is supposed to give the group a new shine. Grieder is ambitious. There is no reason that HUGO BOSS can implement less than Tommy Hilfiger, he said in an interview before taking office in Metzingen. At the end of his five-year term in office, the fashion group should earn around five billion euros, more than twice as much as it does today.
For this it will not be enough to expand online trading. The BOSS Woman brand currently only accounts for around ten percent of sales. That would be one of the adjusting screws that the new boss could turn. He will also have to deal with the trend towards sustainability, which is also affecting the fashion industry. The proportion of so-called responsible styles in the collection is around 25 percent this year, and the trend is rising.
In a green dress
Inditex, which in Germany mainly through the fashion chain ZARA known largest fashion group in Europe, has largely recovered from the pandemic. 98 percent of the stores belonging to the group are open again, albeit with restrictions. With a net profit of 421 million euros, Inditex managed to return to the profit zone in the quarter running from February to April and the result was above the analysts’ estimates. The Spaniards are well positioned when it comes to online business. Last year, Inditex generated almost a third of its sales over the Internet. For comparison: The share of sales at HUGO BOSS was eleven percent in 2020. When it comes to social responsibility and sustainability, Inditex is also one of the pioneers in the industry. By 2025, the cotton and polyester fabrics used for all eight group brands are to be made from 100 percent sustainably grown cotton or recyclable.
The Swedish clothing chain H&M is also back in the black. In the three months to the end of May, the group earned the equivalent of 355 million euros before taxes. However, experts expect that more discount campaigns will be necessary in order to reduce stocks. The crisis is not completely over for H&M. At least the measures to reduce costs are taking effect: rental contracts have been renegotiated, personnel costs have been reduced and conditions with suppliers revised.
With Helena Helmersson at the helm, who has headed the group since 2020, the Swedes are looking for new sources of income. The company is planning to expand its second-hand subsidiary Sellpy into a further 20 countries. Above all, Helmersson must succeed in making up for the failures of the past in expanding e-commerce. For a long time the Swedes had hardly invested in online business. So you got a little out of style with the core target group, the young buyers.
Europe’s largest fashion group is back in the profit zone and recently its sales again above the comparable level of the pre-COVID year 2019. Inditex is well positioned in online trading with positive effects on margins. The targeted distributions this year of twice 35 euro cents and the fundamentally strong dividends make the share even more attractive.
The Metzinger share has left the corona setback behind. The new CEO is facing several challenges at the same time: He has to take advantage of the opportunities in the Asia region, especially in China, to further strengthen online trading and to expand the women’s clothing segment. HUGO BOSS has potential everywhere that has largely been idle for years. For investors with risk tolerance, however, the share is a buy.
The Swedes are eagerly looking for new sources of income. With the expansion of the second-hand subsidiary Sellpy, H&M is serving the sustainability boom and the trend to save resources. On the other hand, it took a long time to expand online trading in an appealing way. Despite the improvement, sales were recently well below the pre-crisis level, but the share price is already well above it. Keep.
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Image sources: Zara, Brunel Johnson / Unsplash