While consumers and retail companies have been holding up surprisingly well through a world of trouble — from war to inflation to political uncertainty — the fashion industry is still vulnerable to shocks on Wall Street.
Think of it as a reminder of how quickly trends can change.
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On Wednesday, it was a sell off of luxury and fashion stocks as the U.S.-Iranian cease fire appeared to crumble as well as a warning from the International Monetary Fund that global economic growth would slow to 3 percent this year, down from an average of 3.5 percent over the prior two years.
The Dow Jones Industrial Average fell 1.1 percent , or 576.76 points, to 52,348.39 and fashion went along for the ride.
Among those falling the hardest in the global fashion industry were Capri Holdings, down 7.8 percent to $17.90; Bath & Body Works Inc., 6 percent to $19.39; Kohl’s Corp., 5.2 percent to $15.89; Kering, 5 percent to 239.65 euros; Hermès International, 4.2 percent to 1,570.50 euros; Tapestry Inc., 4.2 percent to $140.14; Inditex, 4 percent to 54.16 euros, and Brunello Cucinelli, 3.8 percent to 78.82 euros.
The war in Iran, what will happen if it really flares back up and how the oil shock that’s already reverberated out of the conflict will translate into the broader economies is almost the definition of an “uncontrollable” for a fashion chief executive officer.
The corporate bigwigs prefer to look past the big macro changes and focus instead on the “controllables” they can influence.
So it was with John Idol, chairman and CEO of Capri Holdings, who was at a Bernstein investor conference in New York talking about all the change at his company.
Capri, which was set to become part of Tapestry Inc. before the deal was hung up by an antitrust challenge, sold Versace last year, dramatically cleaning up its balance sheet and ending the year with just over $200 million in debt.
That has helped Capri zero in on its Michael Kors and Jimmy Choo businesses.
“Brands go through cycles,” Idol said. “They go up and down at various points in time. And when we really looked at our portfolio, we thought that we had an incredible opportunity to focus on Michael Kors. And that’s when we made the decision to sell Versace.”
Idol is looking to get Michael Kors’ sales from about $3 billion back to $4 billion, while Jimmy Choo builds from $600 million to $800 million.
