Coinciding with the start of London Fashion week on Friday 14 September, Chanel, the 110-year-old family-owned, Paris-based fashion house, announced it was relocating its global headquarters to – London! Gasps all round, understandably, as pre-[deal or no deal] Brexit this legend, with sales over £7bn, employing 20,000 people, is the most influential luxury brand on social media with 57m followers.
They said they wanted to "simplify the structure of the business and London is the most central location for our markets, uses the English language and has strong corporate governance standards with its regulatory and legal requirements". Sound familiar? Worth noting: the UK fashion industry last year contributed £32bn to Britain plc, up 5.4 per cent on the previous year, making it one of the fastest-growing sectors of the economy. Lots of people working in an area they want to and which generates a lot of ‘value added’.
What’s all this to the typical Investors Chronicle reader, you ask. Hemlines. We still have to sit through the catwalks of Milan (19th September) and Paris (24th September) Fashion weeks, but based on those in New York and London, the mood is demure. Alexa Chung’s debut at the show had nods to the 1970’s, with waistcoats, wide-legged trousers and a dark palette of mustard, brown and burgundy. Other designers featured long sleeves, long-line jackets and ankle-skimming skirts.
A well-known market indicator for 100 years – at least to those old enough to remember. The hemline index, a concept first postulated in 1926 by George Taylor, suggested that ladies’ dresses got shorter and stock markets rose in tandem; a tendency to longer skirts went hand in hand with bear markets. Dubbed the ‘bull market and bare knees’, looking back at the roaring twenties it captures the mood. From the late Edwardian fashion for ankle-length tea gowns in lavender and pale grey, to flappers with bob-cuts dancing the Charleston. The associated chart is of the Dow Jones Industrial Average where we can see that it all ended in tears.
Then, in an age of austerity, workaday clothes in hard-wearing colours such as black, brown and slate predominated, men in flat caps at soup kitchens and women either in simple shift dresses or utilitarian suits.
The chart of the FTSE All-Share in the 1970s shows the move in reverse. From swinging sixties and mini-skirts, sleeves and dresses got longer, a mix of country-style modesty (think Laura Ashley) and an androgynous look with flared trousers in sludgy colours, platform boots and long hair – for both men and women! Britain was working a three-day-week and finances got so bad the country had to resort to a loan from the IMF. Stock market nominal gains were eroded by rampant inflation.
In 1982 a real bull market started in Britain, Japan and the US (in Europe it wasn’t to begin for another decade) as Paul Volker started taming inflation and the mood lightened considerably. Women in the work place took to well-cut suits in pastel colours, men added brightly-coloured socks and braces to jazz up their smart charcoal grey or navy suits. Things got bigger and flashier along the way, captured by US TV soap opera Dynasty which aired from 1981 to 1989.
This extended boom burst first in Japan in 1990, followed by the dot-com bust in 2000. We’ve once again experienced a decade of strong share price growth for some and I think it’s time to watch those hemlines. Signed: your dedicated follower of fashion.
