Luxury and Fashion Stocks Experience Decline Amid China Economic Concerns

Luxury goods and fashion company stocks faced downward pressure on Wednesday, triggered by mixed economic data emerging from China. While the country met its economic growth target for 2023, weak conditions in the property market and subdued consumer sentiment raised uncertainties about demand in China. This has been impacting luxury stocks periodically, given China’s crucial role as a significant market for these companies.

In the morning trading session, LVMH and Kering observed declines of 1.5% and 2.6%, respectively. Richemont and Swatch also experienced a dip in their share prices.

On the German market, shares of fashion retailer Hugo Boss registered a 2.5% loss, managing to stay above the previous day’s low. The previous day had seen a nearly ten percent drop in Hugo Boss shares following the company’s disappointing annual outlook.

Within the DAX, Adidas witnessed a 2.9% decrease, while Puma faced a more substantial decline of 5.6% in the MDax, reaching its lowest point since November 2022.

Zalando, an online fashion retailer, continued its downward trajectory, hitting a record low on Wednesday. During early Xetra trading, the share price dipped below the 17-euro mark for the first time since its IPO in 2014, closing at 16.45 euros, a 4.3% decrease from the previous day’s Xetra closing price.

Analyst Geoffroy de Mendez from Bank of America rescinded his buy recommendation for Zalando shares after around one year. Despite this, he still sees potential for recovery, setting a target price of 21 euros, considering the recent rapid decline in the share price over the past few months.