Hello. Welcome to Investing in Europe, a weekly newsletter on what’s happening in European companies and markets, filtered for what matters.
I have been investing in Europe for over a decade and here I share some of my thoughts. You can find me on Twitter
This newsletter is for informational purposes only does not represent investment advice. Always do your own research before investing.
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A few things that happened in European markets:
Squeeeeeze: some of the most shorted stocks in Europe were among this week’s best performers, echoing what happened in the US with GameStop, AMC and other names.
Nothing extreme like in the US. We have seen 20%+ squeezes, compared to 400%+ for GameStop. Still, enough to cause some pain to long/short strategies. Melving Capital lost 53% in January due to their short position in GameStop and other names, including a few in Europe.
LVMH reported a relatively good last quarter of 2020 with sales down only 3%. Fashion & Leather goods were particularly strong, up +18%. Link
For the FY20, sales were down 16%. Good or bad? This is a business that could have been impacted much more by the current pandemic. Tourists’ spending represent a significant proportion of luxury sales, and online penetration is quite low, at less than 10% of sales in 2019. Still, it seems that LVMH’s customers kept buying what they could in this pandemic, moving to online channels and buying in their home country instead of abroad.
Diageo returned to growth in the first half of their fiscal year 2021 (which ends in June). North America was the best region, Tequila the best category (the “expensive” Casamigos acquisition now looks like a bargain).
While the on-trade channel (bars, clubs, restaurants) was largely closed, the off-trade channel was strong. Moreover, drinkers moved to more premium spirit: premium + super premium account for 53% of sales.
Boohoo is buying Debenhams’s online business. They are not taking any stores. It looks like a good deal. Link
Covid-19 is accelerating the disruption of the high-street retailers. In 2020 in the UK, the apparel market was down -15% while the online fashion market was up 26%.
In a similar move, Asos is in talks with Arcadia Group's administrators to buy TopShop and Miss Selfridge. Link
Have a good week, stay safe.