16. February 2021 | 10:40 CET
Adler Modemärkte, RYU Apparel, Adidas: Which stock will be in season tomorrow?
Fashion is a challenging business - and at the same time incredibly versatile. While one brand is on the brink of collapse, new labels emerge elsewhere, selling like hot cakes. Why is that? Probably because for many people, fashion is an expression of their identity. When simple clothing becomes a personal statement, fashion companies have won and have a strong brand in their portfolio. But how do you find fashion companies that offer great opportunities?
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ISIN: CA74979J4072 , DE000A1H8MU2 , DE000A1EWWW0
Adler Modemärkte: Where is the bottom?
One approach is to weed out those concepts that promise little success. Adler Modemärkte has been in insolvency proceedings for some time due to over-indebtedness. A reorganization under the Company's responsibility is being examined. According to insolvency experts, such a procedure offers the chance of a comeback. The share reached a new all-time low just a few days ago - but what happens next? While in many classic insolvency proceedings, the share prices only rise again due to senseless speculation and gradually collapse like a house of cards. However, there is still hope in the case of Adler.
As the Company has reported, it was primarily the second lockdown that drove the fashion chain into insolvency. The current status gives the chance to renegotiate with creditors and also to turn on the costs. If the Company succeeds in using the lockdown weeks to set the right course, Adler can again move forward. Positive examples include Galeria Karstadt Kaufhof and Sinn. Some funds have divested themselves of Adler Modemärkte shares in recent weeks, which explains the sell-off and the lower prices. If the value finds a bottom, the restructuring succeeds under the Company's responsibility, and if the business starts up again after the end of the lockdown, there may be hope again, even for shareholders. At present, however, the stock is an insolvency stock. Furthermore, investors should keep in mind that Adler does not have the hippest image and cannot compete digitally with young brands.
RYU Apparel: The turnaround stock that hits a nerve
The Canadian Company RYU Apparel shows that things can go differently for fashion stocks. The Canadians produce high-quality sports and leisure fashion and have met the young and middle-class buyers' taste with their minimalist designs. RYU sells its fashion in retail stores but also online in North America. The idea: once you find your size, you can easily shop the other products online. The concept seems to be working: If you visit the RYU online stores for Canada or the US, many products are already out of stock.
RYU has long recognized that fashion is all about offering something unique and is breaking new ground in marketing. In addition to product placements in films and series, the Company also relies on influencer marketing and cooperates with athletes. Examples include professional golfers and the Canadian skateboard team. Just recently, Stefanie Crosby, an expert in cross-border mergers and acquisitions and influencer marketing, joined the board of directors. After the Company was still down a few months ago, new CEO Cesare Fazari ensured a turnaround: new designers, more efficient processes and innovative marketing should get the Company and the stock back on track. In the last three months alone, the share price has risen by almost 40%. Nevertheless, on a three-year horizon, a loss of around 90% remains - speculative investors can find a great opportunity in precisely this.
Adidas: Top dog with limited potential
Shareholders of Adidas do not need a lot of daring. The Company is one of the world's most prominent players in sportswear. Since it is also becoming more and more fashionable to combine sports accessories with everyday clothing, Adidas is also benefiting. Although the lockdown is also a burden for the brand, Adidas, as a large corporation, has the means to accelerate growth in eCommerce. In the third quarter, the online segment again grew by around 50% after already strong figures in previous quarters.
What gives the share particular stability also ensures that the stock's potential from Franconia is limited: Adidas has long sold its shoes and clothing in all regions of the world. The Company can hardly do any better in marketing either - the world's best-known athletes already wear the brand. What's more, customers often only notice the distinctive lettering in passing. That is the price of high awareness. Despite its problems, Adidas should come through the current lockdown well and is perfectly positioned to maintain its market position. For investors, however, this is a bit short on fantasy. Those looking for stocks where a successful marketing move can multiply profits are better off looking at RYU.