Yesterday’s meeting at Piazza Affari in Milan confirmed many of the figures and trends in fashion/luxury firms for 2016, in both listed and unlisted companies. Growth rates for the decade before 2015 (a CAGR of 5.5%, greater than the global GDP growth) were not experienced in 2016, and are not predicted for 2017, either. This projection was made by Antonio Achille, senior partner at McKinsey/Consumer & Luxury Goods manager for the Mediterranean zone, who presented the 2017 State of Fashion report—a report based on the analysis of 450 fashion firms and 140 interviews with experts and managers throughout the sector.
“As far as sales are concerned, the fashion industry will grow an average of 2.5-3.5% in 2017. This trend takes into account all sectors, aside from discount firms, and in particular the “value” and “accessible luxury” sectors will show decidedly-positive performances: 3-4% and 3.5-4.5%, respectively”.
The outlook is also good for the sector’s IPOs in Piazza Affari, as Raffaele Jerusalmi claims. “Just in the Fashion & Design sector alone, there are 25 stocks that have an aggregated capitalization of more than €51 billion, and since 2011 the sector’s IPOs have gained €1.8 billion through the stock market, with more than €25 billion requests,” stated the Borsa Italiana’s managing director, “And then there’s the ‘Elite’ community, a program designed to gradually bring stocks to the capital market: fashion and design includes 27 Italian firms”.
Among the listed firms who attended yesterday’s event were Aeffe, Cover 50, Italia Independent, Luxottica, Moncler, Piquadro, Prada, Tamburi Investment Partners, Technogym, and Tod’s. But 2017’s Luxury & Finance could expand to other names, especially if some of the 50 named companies in the 11th edition of the Pambianco study of fashion firms and the 4th edition of their design firm study decided to launch new IPOs.
“The 2016 podium once again shows Giorgio Armani ranking highest, followed by Valentino, who rose from seventh position to second, and then Ermengildo Zegna,” explained David Pambianco, “Among the furnishing and design firms, the top three spots were occupied by the same names as 2015: Flos, Kartell, and B&B Italia.”
The two rankings—created in collaboration with Ernst & Young—were made using analyses of figures from 860 fashion companies and 160 furnishing and design companies. These firms were then evaluated using eight parameters: growth, average EBITDA over the past three years, brand notoriety, size, export percentages, retail distribution, debt and market sectors.
Ernst & Young’s Lead Advisor Roberto Bonacina also expressed cautious optimism: “From 2008 up to today, comparing E&Y’s luxury and cosmetics index (which includes a panel of 30 firms, of which 23 are focused on the luxury goods sector and 7 for cosmetics) to the S&P 500 index, the STOXX Europe 600 and the FTSE MIB, the E&Y index continues to overperform in comparison to the market.” affirms Bonacina, “The average annual return is 8%, versus the S&P 500’s 4.5%, the STOXX 600’s -0.7%, and the FTSE MIB’s -8.6%”. Things are looking positive over the last few months as well: “From January 2015 to October 2016, the E&Y index grew to a CAGR of 3.5%. To the investors’ eyes, the luxury market is still characterized by solid financial foundations and profitability.”
Antonio Achille, David Pambianco, and Roberto Bonacina all agree on the general situation: the luxury goods sector, with its products backed by strong brands, is undergoing a revolution in the way that they sell and communicate with clients. But their fundamentals continue to remain solid.
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