Luxury, athleisure and fast fashion the most valuable niches for fashion brands

The FashionUnited Index of Most Valuable Fashion Brands gathers the largest fashion brands in the world by brand value. The top ten companies of the index represent the crème of the crop of luxury goods retailers, athleisure brands and fast fashion champions.

The index contains a total of hundred companies. The top ten firms by brand value are led by Nike, luxury goods giants Hermés, Louis Vuitton, Cartier, Rolex and Gucci; and fast fashion companies Uniqlo, H&M, and Zara. Number ten is also a sportswear brand, Adidas.

The most valuable ten companies of the index are worth a total 65 billion dollars as of October, 24.

FashionUnited Most Valuable Brands Top 10: sportswear, fast fashion and luxury goods

The index created by FashionUnited Business Intelligence calculates a large part of the brand value in base to the given company's, or comparable company's if privately listed, P/E ratio. This ratio represents both the investors' and the market's analysts' expectation regarding the stock and the future performance of a company.

For instance, Hermés (ranking second most valued brand within this index, with about 26 billion dollars) has always been very stable, proving resilient even when the luxury market went through troubled waters. According to the data gathered within this index, Hermés performs better than its competitors and has a higher P/E ratio.

Other aspects of the formula employed by FashionUnited Business Intelligence are income and capital employed. The latter hints that if a company holds much assets and has a high working capital, it needs more money to continue its operations, therefore suffering a loss in terms of brand value.

This is the case of Nike, number 1 of the ranking with an estimated brand value of over 28 billion dollars, and Under Armour, which have higher inventories compared to revenue than Adidas, (last of the top ten companies gathered within this index); therefore Adidas' has a relatively higher brand value. Other aspect considered to calculate the approximated value of each brand is the trademark value.

Athleisure is, indeed, one of the most profitable niches within the fashion market. Morgan Stanley predicts the "athleisure" clothing market will make up to 83 billion dollars in sales by 2020,

USA remains the largest country by number of companies that made it to the index

USA, France and Italy, the countries most represented in the index

Circa 50 percent of the hundred companies named within this index are based in the USA, turning this country into the most represented one. Names spanning affordable luxury (Michael Kors, Tommy Hilfiger, Tom Ford), athletic apparel (Under Armour, Nike, Foot Locker), discounted prices stores (TJ Maxx.)

Second up is France, with a fair group of European companies including Hermés, Louis Vuitton, Chanel, Dior or Chopard, to mention but a few. Italy is represented quite well as well by the likes of Prada and Gucci.

Closing the leading European countries represented in this benchmark index, the UK stands on its own with heavy weights of the fashion world including Burberry, ASOS and Topshop.

The most relevant Asian companies include jewellery and accessories group Chow Tai Fook and fast fashion giant UNIQLO.

Economic crisis plays favourably for C&A, TJ Maxx and other affordable fashion chains

Some companies such as C&A and TJ Maxx keep benefiting from the economic crisis tail effect: discounted prices and aggressive promotions still resonate well with consumers around the globe. Among the major off-price retailers, TJX Companies (TJX) is the largest player with an extensive store count of 3,675 stores as of July 30, 2016, in the US, Canada, UK, Ireland, Germany, Poland, Austria, the Netherlands, and Australia.

As of July 30, 2016, Ross Stores (ROST) operated 1,317 Ross Dress for Less locations and 184 dd’s Discounts stores in the US. Burlington Stores (BURL) operated 569 stores in the US as of July 30, 2016. Unlike TJX Companies, Ross Stores and Burlington Stores lack an international presence.

On another note, retail groups like the Gap Inc. managed to spread this across the index, as its different brands have made it to the FashionUnited Most Valuable Brands Index: Banana Republic holds position 95 with a brand value of almost 641 million dollars, while big sister brand Gap comes number 55 and the Index values it at 1.4 billion dollars.

Image:FashionUnited Most Valuable Brands Index