Hugo Boss’ upbeat outlook, ASOS’ return to profitability, and H&M’s great start to June as the second-largest fashion store in the world all contributed to assuaging concerns about a sector that has been negatively impacted by weak demand.
Investors worried that economic uncertainty is causing consumers in important regions like Europe, the US, and China to spend less on clothing were relieved by signs of resilience. However, financially strapped consumers are becoming more picky about the clothing they buy, widening the gap between companies.
“Retailers with a clear, distinctive brand and a very clear value proposition, where product quality is key, will emerge as the winners from a tougher environment,” said Erin Brookes, head of retail at consultancy Alvarez & Marsal.
As analysts predicted a higher third quarter following flat sales from March to May, H&M shares increased 3.5 per cent.
With fast-fashion behemoth SHEIN stealing market share with its affordable clothing, H&M, which has trailed behind Zara owner Inditex, has worked to boost its fashion appeal and further develop its more expensive brand Cos.
Young customers who seek the newest trends at affordable prices are a major source of revenue for ASOS, which is currently struggling to recover from a rapid increase in inventory and debt. It said that despite declining sales, its emphasis on profit per order was paying off.
