The devil wears Prada: a study of the Impact of COVID-19 on the financial statements of luxury fashion companies

Abstract

This paper investigates the financial effects of the COVID crisis on the luxury fashion industry. The methodology used is a number of ratios and financial data studied from the financial statements of eleven companies in the sector. The results are compared with the data of four other industries: mass-apparel fashion, energy, food and pharmaceutical. The investigation unveiled the challenges luxury fashion faced during the 2020 crisis but recovered in around a year, and that the more luxurious a company is, the less affected it was. The comparison then revealed many similarities in financial behaviour with the mass-apparel fashion industry, and concluded that both fashion sectors behaved cyclically, and the others, countercyclically. This research contributes to the financial and numerical analysis of luxury fashion during COVID, a subject with limited in-depth research so far. It also proposes that future studies research the long-term effects of the pandemic crisis on the sector.