FW15: Extreme FX environment is benefitting Europe

We close our Fashion Week program with a relatively positive impression overall. The companies we spoke to seem prudently confident. This mood seems consistent with the 4Q14 results, which have generally revealed better organic growth than most observers expected – this has added momentum to a sector rebound triggered by ECB intervention and EUR weakness.

Chinese growth offsetting Russia’s decline – European local demand has found a bottom

Chinese consumers come and spend more in Europe, helping to offset Russian retrenchment. Local demand seems to be stirring in some key European luxury goods markets, particularly Italy. The combined effect of Renzi’s activism, a favourable export environment, easing credit conditions, and the prospect of Expo Milano are offering a glimmer of optimism for the first time in many years.

Self-help is likely going to dominate corporate agendas in 2015 – LFL growth is centre stage

Corporates continue to be prudent, which should be positive for their cost positions, and determined to act on key areas for improvement. Space growth is clearly off the agenda. Companies are pushing more sales through their stores, pricing, product innovation, digital and self-help.

Accessible brands come of age – High-end fashion brands look for a viable business model

Accessible luxury leather brands are finding massive consumer demand support both in Europe and overseas, e.g., Furla in leather goods and Moschino in fashion. High-end fashion players seem to be walking away from the combination of: loss-making flagship stores and RTW. There seem to be more candidates trying to develop in leather goods.