Creative Changes in Gucci And Duties Increase Puts Fashion Stocks Under Pressure
Fashion companies are one of the worst performing parts of the European economy at the beginning of the week, thus extending the declines caused by two factors. First, investors reacted nervously to Kering’s decision to appoint Demna as creative director of Gucci. The Georgian, who just a moment ago headed the Balenciaga brand, raised concerns that avant-garde and exaggerated designs would not work in the elegant and traditional Gucci. On the other hand, perhaps this bold approach to creation will allow the brand, which dominated the world’s salons only 4 years ago, to rise from its knees. Bank analysts themselves are not certain at the moment about the future of the brand under Demna’s helm, but these changes are very likely to cause a lot of confusion (in the good or bad sense of the word).
Secondly, the mood in the general market is spoiled by the announcement of a 200% increase in customs duties on European wines, champagnes and other alcohols. Interestingly, giant Louis Vuitton Moët Hennessy (MC.FR) generates nearly 9% of its total revenue from alcohol sales, 33% of which comes from exports to the US.
Fashion stocks performance last week. Source: xStation
Kering shares are returning to their 8-year lows. Source: xStation
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