Blog: You, us, everyone

While inflationary pressures globally have broadly eased, driven by lower input prices and less restrictive monetary stances, inflation related to services and wages has remained sticky. Geopolitical tensions in Europe and the Middle East pose risks to a sustained downward path of inflation. Fashion retailers appear to take a downbeat.

That said, consumers in Europe and the States have started changing their approach and Affluent Luxury companies have started feeling the heat. Typically companies like Lululemon and any member of its peer group, reflect this change of consumer habits through volatile past results and outlooks that do not meet analyst expectations. As it looks like, their pricing power appears to have reached the upper limit as they give more focus on operational efficiency to manage the increased input costs.

By contrast, cosmetics giants such as L'Oreal, which is the world's biggest beauty company, appear to transition better through the stormy situation. L’Oreal's sales grew by more than 12 % as its mass-market range and dermatological products compensated for weakness in the luxury segment. Yet, there a nuance to this statement: U.S. retailer Ulta Beauty this month rattled the market with a comment about a faster-than-expected slowdown in the United States that hit shares across the sector.