º£½ÇÊÓƵ stocks are once again outpacing high street brands as investors anticipate a luxury resurgence.
Brands that faced difficulties last year, such as Burberry and Kering, are making a comeback, while firms heavily reliant on physical stores like Primark are finding it tough, as reported by .
The top ten luxury retailers by market cap have seen their stock price increase by an average of 19 per cent so far this year.
In contrast, high street stocks have only risen by 11 per cent, with the share prices of JD Sports, Asos and Primark-owner ABF declining in the past two months.
The average performance of high street stocks has been buoyed by German retailer Zalando, which has seen a 23 per cent rise in its share price this year.
The e-commerce giant's share price has rocketed by 101 per cent over the past year, significantly outperforming its competitors.
"Over the past year, lower-cost high-street brands fared better in general as value-conscious consumers prioritised affordability amidst sticky inflation," said Lale Akoner, global market analyst at eToro.
"Yet some of the most recognisable names to British shoppers within our basket – Asos, JD and Primark – were not part of this growth. Instead, they were burdened by persistent inventory and profitability issues, highlighting the pressures facing fast fashion in a competitive, discount-driven environment."
Seven out of the ten largest listed high street firms have seen their share prices fall over the past five years.
Betting on luxury stocks
Despite a significant downturn in the post-pandemic period due to weak demand from China and overstretched European consumers, luxury is making a comeback.
Burberry is poised to rejoin the FTSE 100 after being dropped from the index last September, and even Kering, which has been struggling, has seen its share price increase by 19 per cent since the start of the year.
The luxury sector received a boost following impressive results from Richemont in January, which lifted luxury stocks globally. RBC analysts Piral Dadhania and Richard Chamberlain predicted late last year that the luxury market would see an upturn in 2025, with promising opportunities in North America and a stabilisation of the Chinese market.
"Whilst luxury has generally been a tough sector [in the second half of 2023 and in 2024]... the setup is improving," the analysts stated. However, Akoner cautioned that "it will take some time for [troubled stocks] to claw back their share price, especially as the Chinese economy is still facing challenges."
Hermes continues to outperform, with its stock price increasing by 296 per cent over the past five years and 21 per cent since the start of the year.
Hermes remains one of the few luxury retailers unaffected by the widespread downturn in the luxury sector over the past two years, a resilience analysts attribute to its strong brand identity and the status-symbol reputation of its Birkin bags.
