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This week in fashion news: luxury stocks in Europe fell, potentially indicating troubling times ahead for the industry, and one discount e-comm retailer saw sales soar as consumers continue to look for deals.
Luxury stocks down
The luxury industry has taken a hit lately as inflation and a pullback on consumer spending continue, and this week, the Euro Stoxx Luxury 10 Index was down 1.9%, the biggest drop in a month. The dip followed Chanel’s 2023 financial results. While the brand netted a 16% increase in annual revenue, reaching $19.7 billion, Global CFO Philippe Blondiaux warned of difficult times ahead. “After three years of exceptional growth for our industry, we are now entering a more challenging environment,” he said in a statement.
Why this matters: Luxury has seen a consistent downturn over the past year as shoppers cut back on discretionary spending. While some, like LVMH, have weathered the storm to some degree, others like Kering, the conglomerate that owns Gucci and YSL, continue to see profits dip. Collectively, Gucci, YSL, and Bottega Veneta were down 8% YoY, which led to Kering reporting a 6% drop in Q4.
Temu’s Q1 results beat estimates
Temu parent PDD holdings reported upbeat Q1 results that beat analysts’ expectations, with revenue up 131% to 86.81 billion yuan ($11.99 billion).
Why this matters: The discount retailer is not the only one to see increased consumer interest. Competitors Alibaba and JD.com have also reported a positive annual outlook for the year as shoppers increasingly look for discounts and deals amid high inflation.
VF corp suffers a loss
North Face and Supreme parent VF Corp posted a Q4 loss and revenue drop as demand for its products waned. North Face shares were down 34.5% this year, and Vans were down 26%, which the retailer blamed on inventory clearance efforts.
Why this matters: It’s not a great time to be an athletic or sportswear company right now. Nike, for example, earlier this year warned of dwindling profits in the first half of next year. The retailer has also had two rounds of layoffs that cut 750 jobs as part of its $2 billion savings plan introduced in December.