The Wall Street Journal’s Carol Ryan and Jinjoo Lee note that high-end American fashion houses are outperforming European competitors both in sales and in the stock market.
The best investment in the luxury goods industry over the past five years wasn’t one of the usual suspects such as Hermès. Instead, Coach-owner Tapestry is the surprise leader, with Ralph Lauren a runner-up.
Shares in Ralph Lauren and Tapestry have gained 29% and 55%, respectively, this year, on top of total shareholder returns of more than 60% in 2024. Not bad for brands that are sometimes considered the poor cousins to pricier and more established European luxury names. As a multiple of forward earnings, Tapestry and Ralph Lauren’s shares no longer trade at steep discounts to the European luxury houses.
The recent earnings season showed a widening gap between the performance of European and U.S. brands. Coach increased sales by 13% from a year earlier in the latest quarter. Ralph Lauren grew 11%.
Some European brands that cater to the superrich—Hermès and Brunello Cucinelli—are keeping up with the Americans. So is Prada-owned Miu Miu, which is a hit with young shoppers. But demand has slumped at luxury mainstays including Gucci and LVMH’s fashion and leather goods division. On average, sales for European luxury brands dipped 3% last quarter compared with a year earlier, according to Bank of America.
Read more here.
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