"With the Savigny Luxury Index (SLI) gaining 6.8 per cent in October, almost double the MSCI’s gain of 3.5 per cent, global luxury brands are heaving a sigh of relief. Kering outperformed the SLI, rallying 17 per cent on the back of yet another strong set of results. Gucci’s 49 per cent sales growth in the last quarter helped Kering to report a 28 per cent growth. LVMH also performed well month, climbing 10 per cent on the back of excellent third quarter results."

With the Savigny Luxury Index (SLI) gaining 6.8 per cent in October, almost double the MSCI’s gain of 3.5 per cent, global luxury brands are heaving a sigh of relief. Kering outperformed the SLI, rallying 17 per cent on the back of yet another strong set of results. Gucci’s 49 per cent sales growth in the last quarter helped Kering to report a 28 per cent growth. LVMH also performed well month, climbing 10 per cent on the back of excellent third quarter results. Burberry gained 8 per cent this month as brokers upgraded the stock in light of its recovery potential; nevertheless, the stock slipped back at the end of the month when Christopher Bailey announced his intention to leave the group in March 2018.

Watch sector also bounced back this time. Richemont expected a net profit jump of 80 per cent in its forth coming first half results, driven by demand for its watches. Cartier sales increased 12 per cent. Swatch sales in August and September had grown by 10 per cent. Another boost to the sector was offered by consortium of Hong Kong-based investment funds when it acquired just over 30 per cent of O Luxe Holdings (formerly Ming Fung Jewellery), a listed Hong Kong-based watch distributor and retailer, valuing the company at around $1 billion. Similarly, France-based Efficio Group, a company specialising in digital communications, acquired France’s largest second-hand luxury watch retailer Cresus.

M&A activity across other segments of the luxury sector also witnessed pace. Belstaff was sold to British petrochemicals company Ineos as part of the Reimann family’s progressive exit from the luxury sector. China-based Hony Capital acquired a 30 per cent stake in Mr & Mrs Italy, an Italian brand founded in 2007 and best known for its fur-lined parkas. The beauty segment recorded a number of transactions this month: US-based consumer fund Castanea acquired 30 per cent of skincare brand Tatcha; Henkel acquired US haircare brand Zotos from Shiseido and UK-based online beauty retailer The Hut acquired make-up brand Illamasqua. Last, but by far not least, US-based private equity firm Carlyle acquired a 50 per cent stake in the Millennial cult brand Supreme for a reported $500 million.

Streetwear in the lap of luxury

Streetwear is trending as demonstrated by Carlyle’s investment in Supreme, on the tail of the cult New York brand’s collaboration with Louis Vuitton earlier this year. There has been a big push amongst luxury brands in the casual segment, notably in footwear. All of this has been done to grab millennials’ attention as they have accounted for 85 per cent of the luxury sector’s growth this year, according to Bain.