Milan Fashion Week Fires Up Catwalks despite Cautious Outlook

Milan is back in the limelight with the start of its Fashion Week, with 56 runway shows planned. GABRIEL BOUYS / AFP
Milan is back in the limelight with the start of its Fashion Week, with 56 runway shows planned. GABRIEL BOUYS / AFP
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Milan Fashion Week Fires Up Catwalks despite Cautious Outlook

Milan is back in the limelight with the start of its Fashion Week, with 56 runway shows planned. GABRIEL BOUYS / AFP
Milan is back in the limelight with the start of its Fashion Week, with 56 runway shows planned. GABRIEL BOUYS / AFP

The fashion set moves to Italy Wednesday for Milan Fashion Week, marked by a new designer at Moschino but held amid an uncertain outlook for luxury.
The women's runway shows from Fendi, Prada, Versace and Dolce & Gabbana, among many others, promise a dose of festivity and froufrou in Italy's northern fashion capital, AFP said.
Following fashion weeks in New York and London, Milan again has its moment in the limelight, with 56 runway shows through Sunday on its Fall/Winter 2024-2025 calendar.
But they come amid a backdrop of uncertainty in the global luxury fashion market.
Muted growth projections, inflation concerns, an economic slowdown in China and geopolitical risk loom large for the sector expected to expand globally by just three to five percent this year, according to McKinsey's State of Fashion report published in November.
That is below an estimated five to seven percent for 2023.
Italy's fashion sector -- which includes clothing and leather, shoes, jewelry, cosmetics and accessories -- grew four percent to nearly 103 billion euros ($110 billion) last year, according to estimates from the National Chamber for Italian Fashion.
The association's head, Carlo Capasa, said it was too early to know how 2024 will bode for the industry.
"It's a complex year, it will take resilience," Capasa told journalists earlier this month.
"We know there are three wars, European and US elections. It's a year of transition."
Glitterati gather
But frayed nerves are rarely on display in the front rows, as the glitterati gather for the jam-packed week of fashion's finest.

More than 100,000 people, including buyers, media and brand representatives, are expected for Fashion Week, a rise of 10 percent over last February, Capasa said.
High on the list for fashion watchers will be the debut collection on Thursday of Adrian Appiolaza for Moschino.
The Argentine designer, previously at Loewe, was named creative director of the irreverent, pop-influenced brand last month after his predecessor died just 10 days into the job.
Gucci veteran Davide Renne, who died in November, had been brought in after Jeremy Scott stepped down after a decade at the helm.
Founded by Franco Moschino, the label is known for playful, quirky creations often embellished with slogans -- such as "Gilt without Guilt" or "Good Taste Doesn't Exist" -- or riffing on iconic consumer brands from McDonald's to Barbie.
Debut collections are also expected from Walter Chiapponi at Blumarine -- the flirty, jeans-heavy brand previously led by Nicola Brognano -- and Matteo Tamburini at Tod's.
Chiapponi had been artistic director at Tod's since 2019, and when he left he was replaced by Tamburini, most recently head of ready-to-wear for Bottega Veneta.



LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
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LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights

Shares in LVMH (LVMH.PA) fell as much as 6.5% in early Wednesday trade and were on track for their biggest one-day drop since October 2023 after second-quarter sales growth at the French luxury goods giant missed analysts' consensus estimate.

The world's biggest luxury group said late Tuesday its quarterly sales rose 1% year on year to 20.98 billion euros ($22.76 billion), undershooting the 21.6 billion expected on average by analysts polled by LSEG.

At 1000 GMT, LVMH's shares were down 4.5%.

The earnings miss weighed on other luxury stocks, with Hermes (HRMS.PA), down around 2% and Kering (PRTP.PA), off 3%.

Kering is scheduled to report second-quarter sales after the market close and Hermes reports on Thursday, Reuters reported.

Jittery investors are looking for evidence that the industry will pick up from a recent slowdown, as inflation-hit shoppers hold off from splashing out on designer fashion.

JPMorgan analyst Chiara Battistini cut full year profit forecasts by 2-3% for the group, citing softer trends at LVMH's fashion and leather goods division, home to Louis Vuitton and Dior.

"The soft print is likely to add to ongoing investors’ concerns on the sector more broadly in our view, confirming that even best-in-class players like LVMH cannot be immune from the challenging backdrop," said Battistini in a note to clients.

The weakness of the yen, which has prompted a flood of Chinese shoppers to Japan seeking bargains on luxury goods, added pressure to margins, another source of concern.

Equita cut 2024 sales estimates for LVMH by 3% - attributing 1% to currency fluctuations - and lowered its second half organic sales estimate to 7% growth from 10% growth previously.

The lack of visibility for the second half beyond the easing of comparative figures - as the Chinese post-pandemic lockdown bounce tapered off a year ago - is unlikely to improve investor sentiment to the luxury sector, Citi analyst Thomas Chauvet said in an email to clients.

"No miracle with the luxury bellwether; sector likely to remain out of favour," he wrote.

Jefferies analysts said the miss came as investors eye Chinese shoppers for their potential to "resume their pre-COVID role as the locomotive of industry growth and debate when Western consumers will have fully digested their COVID overspend".

LVMH shares have been volatile since the luxury slowdown emerged, and are down about 20% over the past year, with middle-class shoppers in China, the world's No. 2 economy, a key focus as they rein in purchases at home amid a property slump and job insecurity.

LVMH offered some reassurance, with finance chief Jean-Jacques Guiony telling analysts during a call on Tuesday that Chinese customers were "holding up quite well," while business with US and European customers was "slightly better".