Edition VIII Market Update
By Mareym Manseur & Ava Wildstein
State of the Economy:
The global economy continues to face significant inflationary pressures as evidenced by the increase in costs and rising prices consumers face. This can be seen in every aspect of life, especially when filling a tank of gas or buying groceries. In an effort to curb the highest inflation we’ve seen in over forty years, the Federal Reserve has increased interest rates and is expected to continue to do so by another fifty basis points in the upcoming board session. Consequently, the cost of borrowing for corporations has risen as well, and there has been much debate as to whether these policies will lead to a soft or hard landing for the economy. One of the leading indicators of recession is an inverted yield curve, which as of the last few weeks, has inverted for the first time in many years. Historically, an inverted yield curve has been an almost one hundred percent indicator of an upcoming recession.
Abercrombie & Fitch
Market Cap: $1.85B
Abercrombie & Fitch is an American lifestyle retailer that focuses on casual wear. Previously known for their preppy clothing catered toward a teenage audience, in recent years they have undergone a major rebrand under new management that has transformed their image from juvenile to contemporary. The company’s new CEO, Fran Horowitz, implemented new marketing tactics and focused on a holistic rebrand to compensate for Abercrombie’s controversial brand image under previous management. The new sleek and fashion-forward look allows Abercrombie to regain relevance among their target market who are now in their mid-20s. Their stock is currently recovering from the Omicron surge that affected all retail brands earlier this year and is showing a positive uptake in the market.
Calvin Klein
Market Cap: $5.33B
Calvin Klein Inc. is an American fashion house established in 1968. The brand has become an American classic known for its comfortable basics and celebrity collaborations. Through its collaborations with various celebrities, designers and brands, Calvin Klein is able to maintain a freshness to its brand that is comparatively basic and standard. Their most recent collaboration with Palace Skateboards has been their “most successful” to date according to Stefan Larsson, CEO of the brand’s parent, PVH Corp. Infusing young skater-influenced styles into their traditionally basic products proved to be wildly popular among a younger demographic, and even caused the Calvin Klein website to crash on the launch date of the collection. Moving forward, Calvin Klein is focusing on their e-commerce channels to capture a younger, virtual audience and prepare better for when demand skyrockets. The brand increased its digital business by 30 percent in 2021 and has plans to sustain this growth. Similar to other fashion brands, PVH is steadily recovering from Omicron setbacks and is well equipped to continue growing and rolling out new, inventive collections.
Kering
Market Cap: $73.98B
Kering is a world-class luxury French group who manages the development of many renowned fashion houses. Their subsidiaries include Gucci, Balenciaga, Yves Saint Laurent and Moncler. Kering places creativity at the center of its strategy and strives to push the boundaries of creative expression and the luxury fashion marketplace. Despite tightening coronavirus restrictions in China over the past few months, the company has sustained growth within the first quarter of 2022. Houses like Saint Laurent and Bottega Veneta delivered double-digit revenue growth this quarter, and annual revenue from directly operated stores is up 23% since last year as well as 32% since 2019. This year marks a massive expansion of Kering’s online presence, and online marketplaces alone accounted for 15% of the company’s total sales. Additionally, Kering recently announced a partnership with France’s Ministry of Labor, Employment and Economic Inclusion, and the High Commission for Employment and Business Commitment in an effort to take action in helping young people find employment. This partnership will also be instrumental in helping make more roles accessible to disabled people, as the initiative includes recruitment, work/study programs and mentorship experience through the Youth Commitment Contract.
The global economy continues to face significant inflationary pressures as evidenced by the increase in costs and rising prices consumers face. This can be seen in every aspect of life, especially when filling a tank of gas or buying groceries. In an effort to curb the highest inflation we’ve seen in over forty years, the Federal Reserve has increased interest rates and is expected to continue to do so by another fifty basis points in the upcoming board session. Consequently, the cost of borrowing for corporations has risen as well, and there has been much debate as to whether these policies will lead to a soft or hard landing for the economy. One of the leading indicators of recession is an inverted yield curve, which as of the last few weeks, has inverted for the first time in many years. Historically, an inverted yield curve has been an almost one hundred percent indicator of an upcoming recession.
Abercrombie & Fitch
Market Cap: $1.85B
Abercrombie & Fitch is an American lifestyle retailer that focuses on casual wear. Previously known for their preppy clothing catered toward a teenage audience, in recent years they have undergone a major rebrand under new management that has transformed their image from juvenile to contemporary. The company’s new CEO, Fran Horowitz, implemented new marketing tactics and focused on a holistic rebrand to compensate for Abercrombie’s controversial brand image under previous management. The new sleek and fashion-forward look allows Abercrombie to regain relevance among their target market who are now in their mid-20s. Their stock is currently recovering from the Omicron surge that affected all retail brands earlier this year and is showing a positive uptake in the market.
Calvin Klein
Market Cap: $5.33B
Calvin Klein Inc. is an American fashion house established in 1968. The brand has become an American classic known for its comfortable basics and celebrity collaborations. Through its collaborations with various celebrities, designers and brands, Calvin Klein is able to maintain a freshness to its brand that is comparatively basic and standard. Their most recent collaboration with Palace Skateboards has been their “most successful” to date according to Stefan Larsson, CEO of the brand’s parent, PVH Corp. Infusing young skater-influenced styles into their traditionally basic products proved to be wildly popular among a younger demographic, and even caused the Calvin Klein website to crash on the launch date of the collection. Moving forward, Calvin Klein is focusing on their e-commerce channels to capture a younger, virtual audience and prepare better for when demand skyrockets. The brand increased its digital business by 30 percent in 2021 and has plans to sustain this growth. Similar to other fashion brands, PVH is steadily recovering from Omicron setbacks and is well equipped to continue growing and rolling out new, inventive collections.
Kering
Market Cap: $73.98B
Kering is a world-class luxury French group who manages the development of many renowned fashion houses. Their subsidiaries include Gucci, Balenciaga, Yves Saint Laurent and Moncler. Kering places creativity at the center of its strategy and strives to push the boundaries of creative expression and the luxury fashion marketplace. Despite tightening coronavirus restrictions in China over the past few months, the company has sustained growth within the first quarter of 2022. Houses like Saint Laurent and Bottega Veneta delivered double-digit revenue growth this quarter, and annual revenue from directly operated stores is up 23% since last year as well as 32% since 2019. This year marks a massive expansion of Kering’s online presence, and online marketplaces alone accounted for 15% of the company’s total sales. Additionally, Kering recently announced a partnership with France’s Ministry of Labor, Employment and Economic Inclusion, and the High Commission for Employment and Business Commitment in an effort to take action in helping young people find employment. This partnership will also be instrumental in helping make more roles accessible to disabled people, as the initiative includes recruitment, work/study programs and mentorship experience through the Youth Commitment Contract.