The case

Top brands in the fashion sector have been requesting new capital or have been implementing cost-cutting measures despite growing sales. Is the fashion industry suffering from a temporary weakness in consumption or has the peak been passed because fashion buyers have become older?

Source: International Financial Press / Anton Ladner

The commentary

Sales growth and capital requirements: Despite impressive sales growth, leading brands such as Chanel or Dolce & Gabbana have been looking for additional capital. Chanel achieved sales of USD 19.7 billion (+16 %) and a profit of USD 6.4 billion (+11 %) in 2023. Nevertheless, Chanel organised a private placement of USD 700 million. Dolce & Gabbana recorded a 17 % increase in sales to USD 2.05 billion in the 2023 – 2024 financial year and plans to take on a minority investor instead of an IPO.

Postponement of IPOs: Renzo Rosso postponed the IPO of his holding company Only The Brave (OTB) to 2026 in order to meet investor expectations. OTB achieved a turnover of USD  2.08 billion and an operating profit of USD 154 million in 2023.

Profit slumps and repositioning: Other companies such as Salvatore Ferragamo and Hugo Boss are struggling with slumping profits. Ferragamo recorded a 73.2 % drop in profits to USD 6.2 million in the first half of 2024 due to declining sales in Asia and Europe. Hugo Boss reported a 1 % drop in sales in the second quarter and a slump in operating profit of over 40 %.

These developments are in part surprising, as both Hugo Boss and Ferragamo have undergone extensive repositioning. However, the fashion market is changing rapidly, driven by digitalisation, sustainability and changing consumer habits.

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