High Street Fashion Shares Soar Despite Falling Demand


Shares of the 10 largest European high street fashion companies increased by 24.9 percent over the past year, with shares of the Polish company LPP rising more than shares of Inditex or H&M. The industry is faring quite well despite falling demand. Clothing prices in Europe have stabilized, and in Poland, they have decreased by 1.4 percent since the beginning of the year.

High street fashion is an important element of the European fashion industry, encompassing brands such as Zara (Inditex), H&M, and Reserved (LPP). Thanks to their great potential for adaptation, they have successfully navigated the pandemic and periods of cost increases due to global inflation. They are also meeting the needs of consumers, who are increasingly opting to shop online rather than in traditional stores. Clients are also demanding greater environmental sustainability and welfare for the workers who manufacture the clothes. The current economic situation and consumers’ frugal behavior remain challenges for many companies.

After a period of significant increases, clothing prices in the European market have stopped climbing. According to GUS data, in Poland, over the last 12 months (as of end August 2023), clothing and footwear prices increased by 6.7 percent. However, this is the result of price increases in 2022, as since the beginning of 2023, prices have fallen by 1.4 percent. And just in August, clothing prices fell by 0.7 percent. Retail sales of clothing and footwear also dropped, being 4.9 percent lower in terms of constant prices in August compared to the same time last year.

Similar trends can be observed throughout Europe, where inflation is considerably decreasing. At the same time, due to the economic situation, consumers are cutting back on their spending, including on clothes. In such a situation, high street fashion companies are faring quite well. The shares of the 10 largest listed European companies in this industry increased by 24.9 percent over the last year. This industry did better than the broad index of European stocks Stoxx 600, which gained 9.2 percent during the same period, and the 10 largest luxury brands increased their market capitalization by 16 percent.

The leader in the growth in the last year turned out to be the shares of the Polish company LPP, which doubled in value. During the same time, Inditex shares rose by 38.2 percent, and H&M by 32.5 percent. On the other end of the spectrum were the shares of large online clothing retailers – ASOS shares fell by 36.8 percent, and Zalando by 8 percent. While in the last 12 months the industry managed to beat the broad market of European shares (Stoxx 600 index – 9.2 percent) more than twice, in earlier years the industry’s results were significantly worse than the market. In the longer term, luxury clothing companies, whose shares have increased by over 85 percent in the last 3 years, were doing much better.

The performance of individual companies in the high street fashion industry is as follows:

Investment Period Average Inditex H&M LPP Next JD Sports Zalando ASOS
In 2023 3.3% 38.2% 34.0% 15.2% 20.1% 14.4% -40.1% -26.7%
1 Year 24.9% 55.5% 32.5% 50.0% 38.6% 33.7% -8.0% -36.8%
2 Years -24.4% 6.7% -13.8% -15.0% -13.3% -32.5% -74.3% -87.0%
3 Years 9.5% 41.3% -6.3% 76.0% 13.1% -9.1% -75.5% -93.1%
5 Years 11.8% 34.6% -10.6% 42.3% 28.7% 58.5% -40.6% -93.4%

The average includes the 10 largest British and European mass fashion retailers by market capitalization. Data as of October 4, 2023.

Author: Paweł Majtkowski, eToro Analyst in Poland.