Why Fast Retailing, LVMH, and Hermes were good investments for 2016

London - 2016 has been kinder to some fashion companies than others, a fact that is thrown into sharp relief when looking at the top ten public fashion companies. While some fashion companies had to battle currency changes and political instability, others were faced with a slowdown in demand and struck by the shift in consumer shopping behaviour. However, a handful of fashion companies have managed to battle the odds and come out on top to see the market value of their company increase rather than decreasing, making them worthy investments.

But here is one fashion company which has risen a level more than the peers, none other than Japanese fashion conglomerate Fast Retailing. According to data collected from FashionUnited’s top ten public fashion companies of 2016, Fast Retailing is the biggest riser in terms of increasing market value of the last 6 months. Fast Retailing saw its market value increase from 29.1 billion dollars in June, 2016 to 39.6 billion dollars in December, 2016. Part of its success is attributed to its massive growth in China, as the fashion company has managed to rapidly expanded here and has announced further plans to expand in this region. City analysts currently believe that Fast Retailing's core brand Uniqlo has huge potential to grow in Asia’s largest region, which helped led to its market value growth of 10.5 billion dollars, or 36 percent in 6 months.

One luxury fashion group which has managed to buck the trend and achieve solid growth this year, thereby proving to be a wise investment is LVMH. The French luxury company managed to take advantage of the growing number of Chinese, American and Russian consumers moving away from high-end luxury items to more affordable luxury items by adjusting the prices and adding more entry-level priced items to its core brand Louis Vuitton. LVMH was also smart to sell off Donna Karan International, a move which proved to be a wise disinvestment and helped the group tighten its focus on its core portfolio. Combined, these power moves helped LVMH market value grow from 88.7 billion dollars in June, 2016 to 96.1 billion dollars in December, 2016.

Another luxury fashion player which proved to be a solid investment this year was none other than Hermes. The luxury brand was mainly supported by robust growth in its leather goods and saddlery division, which led to a 7.4 billion dollar growth in its market value from June to December 2016 to 44.7 billion dollars. This sudden growth, which came on the back of Hermes investments in its supply chain and forecast is especially unique as it came amidst ongoing uncertainty in the European, Chinese and US markets. Bloomberg previously mentioned “Hermes [was] increasing production of its signature leather goods, which have waiting lists that can run for more than a year, while many of its luxury peers are cutting back. Hermes’s push shows the merits of promoting scarcity and not expanding too quickly, even in an upturn.”

Photo: Courtesy of Fast Retailing