Designer investments: London Fashion Week goes public

For the past 35 years, London Fashion Week – which takes place from 13-17 September - has been the definitive exhibition of British style, with more than 250 designers showcasing their creativity to a global audience of influential media and retailers.

This year, for the first time, designers are opening up their shows to the public and there will be six ticketed runway shows that anyone can attend - costing £135 for standard entry and £245 for a spot in the front row. 

However, attending is one thing – buying and pulling off the wearing of some of the designs is probably another... So we've had a look at other ways we can access the fashion industry: by investing in the funds that buy their shares.

Moët Hennessy - Louis Vuitton SE

Also known as LVMH, this French multinational luxury goods conglomerate owns the Christian Dior, Givenchy and Marc Jacobs labels, among many others and is a popular stock: it is held in funds such as BlackRock European Dynamic and Threadneedle European Select on the Chelsea Core Selection. 

It's also a holding in GAM Star Continental European Equity, whose manager, Niall Gallagher, said recently: “The growth in its key fashion and leather goods division has accelerated sequentially to +20% as the year has progressed, despite all the macroeconomic worries, is really testament to the wide appeal of both the Louis Vuitton and Dior brands. The latter has particularly strong brand momentum among millennials in China and the cosmetics division is similarly benefiting from strong growth for luxury skincare. It's also interesting that a brand as big as Louis Vuitton can continue to innovate and be nimble- as evidenced in the very positive response to its menswear collection since the appointment of streetwear designer Virgil Abloh as its head.”


Nick Train, who managers Lindsell Train UK Equity on the Chelsea Core Selection, recently made Prada his first new purchase for nearly two years into sister fund Lindsell Train Global Equity

Nick and his co-managers' style of investing is very much one of 'buy and hold for the long-term',  so they rarely buy or sell holdings in their funds. The position in Prada has been built as the shares languish at their lowest levels since listing on Hong Kong's Hang Seng stock exchange in 2011. 

Nick commented: “As the company expanded it was initially protective of the Prada brand, restricting supply to maintain premium brand value but, over the last five years, the expansion of the retail outlets has led to discounting in directly operated stores and a loss of control over prices in the wholesale channel. These strategic missteps are now being addressed and the company is potentially worth two-to-three times more than today's valuation. However, for that to transpire, it has got to recover its pioneering Zeitgeist, something that's been absent in recent years.”


For those looking for less-expensive fashion choices, Boohoo is an option. It's a holding in Marlborough UK Multi-Cap Growth – also on the Chelsea Core Selection -as well as Merian UK Mid Cap

Richard Hallet, manager of the Marlborough fund told us recently: “We see e-commerce and the move away from bricks and mortar to e-commerce spending as a very strong and powerful trend that's going to continue for many years and our holding in Boohoo - which is a leading, young fashion e-commerce company - is really benefiting from that trend.” 

Richard Watts, manager of the Merian fund added: “We see Boohoo as one of the most exciting companies in our universe: the potent mix of online disruption, coupled with diverse geographical sales growth, increase our confidence that this business will maintain its rapid growth and can scale materially from here. The power of the platform they have created is evident to see, with the exceptional growth across multiple brands, whilst the recent acquisitions of Karen Millen and Coast highlight optionality, a healthy net cash position and high cash generation provides.” 

Inditex (Zara's parent group) 

Inditex is a Spanish multinational clothing company and the biggest fashion group in the world, operating in over 7,200 stores in 93 markets worldwide. It is held by Comgest Growth Europe ex UK and GAM Star Continental European Equity.

Co-manager of the Comgest fund, Alistair Wittet, said: “We believe the long term winners in the retail space are those that can adapt to the online world and combine both store and online. Inditex have a viable e-commerce business model, which is synergetic with the bricks and mortar operations (click and collect and try in store). The company has a low advertising budget of 0.5% of sales versus 3 to 4% for its major competitors and it gives a high degree of control to individual store managers. It also has very short product life-cycles of an average of 2 months, which minimises fashion risk and increases sell through at full price.”

Niall Gallagher, manager of the GAM fund added: “Zara is really the best-in-class global fashion operator in our view, and has been far ahead of its peers in embracing an omnichannel approach. One third of returns for Zara take place in store - allowing the brand to capture the customer traffic and to use this to convert traffic into higher sales  - which is critical as the main problem facing other retailers is that customers just aren't showing up at their stores. Unlike other “fast fashion” brands, Zara has a clean supply chain - 70% of product is sourced in Europe and it has withstood the sustainability backlash well, instead boosting its eco-friendly credentials by showcasing environmentally friendly fabrics.”

Scentre Group Ltd

Finally, for those wanting to the best of both worlds, shopping malls could be the answer. Scentre is a shopping centre company, with retail destinations operating under the Westfield brand in Australia and New Zealand. It is a holding in Jupiter Asian Income fund. 

Manager Jason Pidcock told us this week: “Shopping malls are becoming more social meeting places and locations for companies to showcase their wears – while most of their business can still be done online. Scentre is one of the best shopping mall companies and has a very attractive yield.” 

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the individuals and do not constitute financial advice nor are they a recommendation to buy or sell.


Published on 11/09/2019