Quantcast

Will Luxury Stocks Repeat Their 2017 Success This Fall?


Shutterstock photo

In 2017, sales of luxury goods in the global market increased 5% reaching its best level in history, according to Bain & Company. Per the consultancy firm's yearly report, "millennialization" of the luxury goods industry contributed to its growth last year and will do so even in the second half of 2018.

With trade war between the United States and other major economies like the China and European Union far from over, investors remain apprehensive about the entire scenario. However, the luxury goods market is one such industry that is expected to remain undeterred despite looming trade war concerns.

Luxury Goods Market Maintains Solid Foothold

According to Bain & Company, global sales of luxury goods rose to 262 billion euros in 2017 and are expected between 6% and 8% in 2018, which will be near $327 billion by the end of 2018. Per the report, 85% of 2017's growth was supported by the participation of millennials, or generation Y and Z, in the industry.

Per The State of Fashion 2018, McKinsey and Company and Business of Fashion, the absolute luxury business segment is growing "alongside affordable luxury." According to Transparency Market Research report, the global luxury goods market is expected to cross $374.85 billion by the end of 2020.

Luxury Goods: A Status Symbol

Trade tariffs are evidently a concern for consumers. However, doubt remains over whether trade war could actually affect the customer base for these luxury goods. A few additional dollars on the purchasing cost of these goods will not be an issue for its target customer and instead may serve as a status symbol for them.

A prime example of this is LVMH LVMUY which registered an increase of 11% in sales to 10.9 billion euros or $12.7 billion in the second quarter. Shares of the French luxury products company advanced 41.1% in the last one year on the back of its "aspirational" product lines. The company announced plans of launching several new products this year, which will give it an edge over a competitor like Kering SA PPRUY .

Kors, PVH, Tiffany Supported by Earnings

Also, shares of Michael Kors Holdings Limited KORS jumped 92.4% in the past one year after reporting upbeat earnings results consistently. Additionally, its $1.2 billion takeover of Jimmy Choo in 2017 also contributed to its recent growth.

Additionally, shares of PVH Corp. PVH , makers of Calvin Klein and Tommy Hilfiger, registered an increase of 32.6% in the last one year after posting better-than-expected earnings results in May. Earlier this month, the company launched an integrated e-commerce site for its Heritage Brands, including IZOD.com, VanHeusen.com and styleBureau.com.

Further, jewelry retailer, Tiffany & Co.'s TIF shares gained 46.7% in the last one year after its recent quarter's encouraging earnings results pushed its share performance to its all-time highs in May. While, both Michael Kors and PVH have a Zacks Rank #3 (Hold), Tiffany holds a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Summing Up

Undoubtedly, the luxury goods industry is thriving, following upbeat performance in 2017 and a strong outlook this year. Additionally, trade war concern is not considered a threat to customers of this industry. Moreover, some of the key players of the industry have also shown ample growth in the last one year and are expected to maintain this momentum in the coming months. In this respect, it will be wise to shift some of the attention to the luxury goods industry in the days to come.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Kering SA (PPRUY): Free Stock Analysis Report

Tiffany & Co. (TIF): Free Stock Analysis Report

PVH Corp. (PVH): Free Stock Analysis Report

Michael Kors Holdings Limited (KORS): Free Stock Analysis Report

LVMH-Moet Hennessy Louis Vuitton SA (LVMUY): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: PPRUY , TIF , PVH , KORS , LVMUY



More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research










Research Brokers before you trade

Want to trade FX?