Is the demand for luxuries on the rise?


Wednesday, 3rd May: Hugo Boss seems to think that the demand in luxury goods is about to pick back up, but it certainly isn’t based on their online sales. The suave suit quarter reported yet another decline in online sales of 27% in Q1, largely due to the fall in visits on the website. The chief executive of the group confessed the groups struggles and pinned the blame on two specific factors; 1) The website was too slow compared to rivals, and 2) The group failed to attract online shoppers who are more price sensitive using discounts. Although the men’s fashion guru struggled with online sales, the remaining results, as well as the results of fellow luxury retailers LVMH and Hermes, all point towards a pick up in the demand of luxury goods, particularly in the UK and China. Hugo Boss are actively working on the online issues and making it their priority to resolve them and make the e-commerce division an overachiever for the group. They have expressed their confidence in achieving this and significantly improving their e-commerce operations by the end of the following quarter.

Whilst we’re on the topic of retail, it is worth noting that after a particularly difficult year, M&S announced today that they will be welcoming Halfords CEO, Jill McDonald, to join the group and help pick up the underperforming clothing division. M&S share price has dropped almost 13% ytd and was trading 1.21% lower at 366p in the afternoon. Halfords share price was similarly knocked by around 2.9% to 364p after analysts cut 5% off the target price following the news of McDonald departing from the group.

The boost to earnings after acquiring Argos in 2016 wasn’t enough to help Sainsbury end their run of bad luck with declining profits. This morning they reported their third year of underlying profit decline, as well as a dividend cut. As a consequence, they started off the day near the bottom end of the FTSE, down 2.38% at 273p. A theme which has firmly remained in place within the circle of supermarkets throughout 2017 is that of the declining market share of the industry giants; Tesco, Asda, Sainsbury and Morrison, whilst the smaller and cheaper alternatives; Aldi and Lidl, continue to gain market share.

Supermarkets weren’t responsible for weighing down the FTSE though, which opened around 0.2% lower at 7234, and continued dropping throughout the afternoon, after rumours surfaced that the UK could potentially have to pay a Brexit bill of up to €100bn. Britain’s Brexit minister was swift in making it clear that he was unfamiliar with the rumoured figures, and dismissed the €100bn bill immediately. After a rocky afternoon, the FTSE ended the day identical to the open, down 0.21% at 7234.

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