MARKET UPDATE 12.10.21

JENSEN GUTZWILLER

UNEMPLOYMENT RATE
- Unemployment fell to 4.2% from 4.6%.
- In November, the U.S added 210,000 jobs which is the smallest gain since December 2020 and a slowdown compared to 546,000 added in October.
- The labor force participation rate, which measures the percentage of all people of working age who are employed or are actively seeking work, rose to its highest level since March 2020.

HOLIDAY SEASON SPENDING PROJECTIONS
- November and December retail sales are predicted to grow between 8.5% to 10.5% over 2020 (The NRF 2021).
- Last year’s incredible 8.2% increase in retail sales were driven by consumer spending meant to compensate for a difficult year and return to some type of “holiday normalcy.”
- News surrounding the Omicron variant could potentially damage holiday spending on experiences (NRF).

HOLIDAY SEASON SALES
- Online Black Friday sales in the US fell $100 million from last year, to hit $8.9 Billion.
- Don’t be fooled, the decline isn’t representative of the entire holiday season. If anything, shoppers started earlier than expected, likely influenced by supply chain issues that have caused delays in previous months.
- Between November 1st and 28th, consumers spent $99 Billion, up 13.6% from 2020 (Adobe).
- In-store traffic increased 47.5% from 2020 pandemic levels, but declined 28.3% compared to 2019.
- On Cyber Monday online shoppers spent 1.4% less than last year, but still hit a respectable $10.7 Billion.
- A Contributor? A lack of large discounts giving shoppers fewer reasons to spend.


REMEMBERING A LEGACY AND WHAT IT MEANS TO BE OFF-WHITE
“I was always trying to prove to my 17-year old self that I can do creative things I thought weren’t possible.”

From civil engineering to fashion mogul, Louis Vuitton artistic director and Off-White creator proved exactly what he set out to with his designs. High fashion and streetwear don’t have to fit in a box, and nor do we.

- Vigil, a Chicago native and son of a Ghanian immigrant, received an undergrad degree in civil engineering and later a masters in architecture, the latter of which opened him up to the world of fashion.
- Interning with Kanye West at Fendi forged a friendship that helped him land the creative director role at Kanye’s Creative agency.
- In 2012, Vigil launched Pyrex Vision, his first take on the intersection of streetwear and high fashion featuring flannels inscribed with Pryrex and the number 23 (synonymous with Michael Jordan as any Chicago native would presume).
- In 2013 he created Off-White, a brand named for the color that falls in between black and white and intended to represent a brand that falls in between genres of fashion.
- Sales on the RealReal of Off-White increased 18x on Nov 28th while searches increased 893%.

Vigil passed away on November 28th, but he leaves a legacy behind only few have. His intention and perfect execution of creating art that tells “ a dialogue between high fashion and streetwear” have given us a newfound appreciation for what falls “in between” and outside of the box.


FAST FACTS
- On Nov 26th, Peloton sued Lululemon after they threatened legal action against Peloton earlier this year. On - Nov 29th, Lululemon fired back by filing a lawsuit claiming patent infringement against PTON.
- Estée Lauder companies joined the Dow Jones Sustainability index.
- Moncler announced a 3 year partnership deal with Italian soccer team FC internazionale.
- Gucci will return to Milan fashion week in February for Fall/Winter 2022 after a five season departure.


STOCKS TO WATCH

INDITEX
- Ticker: ITX
- Exchange: Bolsa de Madrid
- Share Price: $16.04 USD
- Market Cap: 86.41B EUR
- Backstory:
In 1963, Zara was founded in western Spain, starting as a gown and dress distributor. 12 years later, founder Amancio Ortega pivoted to open his first retail locations. They found early success due to affordable prices and a close customer-to-designer feel. International expansion and the development of the Inditex brand to include more than Zara has allowed it to grow storefronts in over 202 markets.
Zara, Pull& Bear, Bershka, Massimo Dutti, StradivarIUS, and more are included in their portfolio

New News:
Inditex is the world’s largest clothing retailer.
With Zara being one of the most important companies in the portfolio, the latest news regarding changes in top management are especially important in determining the future of the brand.
News this past week announced that the daughter of Zara’s billionaire founder, Marta Ortega, will replace Pablo Isla as the executive chairwoman in a generational handover. News shocked board members and investors alike and within hours, Inditex shares fell 6%.


SIGNET JEWELERS LTD.
- Ticker: SIG
- Exchange: NYSE
- Share Price: $86.64
- Market Cap: 4.72B
- Backstory:
Signet Jewelers is the world’s largest retailer of diamond jewelry. It owns approximately 2,800 stores primarily and is purpose-driven and sustainability-focused.
Brands in their portfolio include Kay Jewelers, Zales, and Diamond Direct and others.

New News:
Signet sales in October were up 65% compared with last year hitting $5 billion and up 26% over the 2019.
Signet signed in October to purchase Diamonds Direct, for $490 million. The transaction is expected to close the fourth quarter of fiscal year 2022.
On December 2nd, SIF announced its results for the 13 weeks ended October 30, 2021 ("third quarter Fiscal 2022").
Total sales were $1.5 billion, an increase of more than $235 million to Q3 of FY21 and nearly $350 million to Q3 of FY20.


A LETTER FROM THE AUTHOR.....
Over the past 2 years, being an Editorial Member and then Financial Analyst Chair for MASH has been one of the most special experiences I have had at Michigan! It’s been a privilege to be a part of the amazing original and founding team, to now see it expand to campuses across the country, and to be able to share my love for the intersection between business and fashion through my own lens. I will miss it dearly but promise to not stray far when I find myself studying in Milan next semester :). Ciao!



Citations:
https://www.wsj.com/articles/november-jobs-report-unemployment-rate-2021-11638480609?mod=hp_lead_pos1
https://www.forbes.com/sites/pamdanziger/2021/10/28/retailers-must-make-the-most-of-holiday-2021-because-the-good-times-might-not-last-into-2022/?sh=bd7c75e3f7ca
https://www.vox.com/the-goods/2018/10/30/18027074/off-white-timeline-history-luxury-streetwear-virgil-abloh
https://www.highsnobiety.com/p/virgil-abloh-pyrex-vision-original/
https://www.complex.com/style/2019/04/virgil-abloh-arrival-louis-vuitton-impacted-lvmh-revenues
https://www.businessoffashion.com/articles/retail/making-sense-of-this-years-black-friday-sales/
https://www.cnbc.com/2021/11/27/black-friday-shopping-in-stores-drops-28percent-from-pre-pandemic-levels.html
https://nypost.com/2021/11/30/2021-cyber-monday-black-friday-sales-dip-from-last-year/
https://www.wsj.com/articles/cyber-monday-sales-are-expected-to-stall-11638226511
https://www.businessoffashion.com/articles/workplace-talent/power-moves-inditexs-top-management-shakeup-vf-corp-names-president-of-global-packs/
https://www.news.com.au/finance/business/retail/inside-glamorous-life-of-zara-heiress-marta-ortega-perez-the-fashion-empires-secret-weapon/news-story/f4cb5b1f2104aa4fea1b3618e344feed
https://www.businessoffashion.com/briefings/retail/the-future-of-zara/
https://www.businessoffashion.com/articles/retail/soaring-resale-demand-for-off-white-product-puts-platforms-in-a-bind/
https://www.forbes.com/sites/pamdanziger/2021/12/04/signet-jewelers-continues-to-grab-market-share-with-year-to-date-sales-up-65-and-an-acquisition/?sh=22640d773f9a
https://www.clevelandjewishnews.com/news/local_news/signet-jewelers-acquires-diamonds-direct-for-490-million/article_339be416-367b-11ec-a13e-432e15855bba.html
https://www.prnewswire.com/news-releases/signet-jewelers-reports-third-quarter-fiscal-2022-results-and-raises-guidance-301435870.html
https://www.nasdaq.com/articles/best-stocks-to-buy-today-5-retail-stocks-for-your-december-2021-watchlist
https://www.cnbc.com/2021/11/30/omicron-fears-could-shift-holiday-spending-to-retail-goods-nrf-says.html
https://www.nytimes.com/2021/11/30/business/lululemon-peloton-lawsuit.html