Those who do not generate at least 7 billion dollars in annual revenue cannot truly be considered global fashion giants. That, according to Morgan Stanley analyst Alex Straton, is the threshold separating businesses capable of achieving economies of scale from those that cannot. Straton notes that ABG may soon emerge as the next major fashion powerhouse, while Abercrombie & Fitch and On are among the companies with the greatest growth potential.
The measure of global fashion giants
Forget the so-called “one billion club” of the past — the big players have grown even bigger, and the bar for competitiveness has risen sharply. According to Straton, as reported by WWD, the benchmark now stands at 7 billion dollars in annual turnover. In other words, only companies that can surpass this critical threshold can be regarded as true contenders on the global stage. Brands below that line remain confined to local or niche markets. Straton points out that fewer than one third of apparel and footwear companies exceed this level. Many others are close and striving to meet market expectations to break through it. The 7 billion dollars mark is fast becoming a key indicator of credibility in the eyes of the financial markets.
Fragmentation
“The global apparel and footwear market is highly fragmented. Even the biggest players command only single-digit market shares”, Straton writes in the report. Nike currently holds the largest share globally, with just 3.5 per cent of total retail sales value. It is followed by Inditex (2 per cent), Adidas (1.8 per cent), Fast Retailing-Uniqlo (1.2 per cent), H&M (1.2 per cent), Shein (1.2 per cent), Gap (0.9 per cent), Anta (0.8 per cent), LVMH (0.7 per cent) and VF Corporation (0.6 per cent). These figures reveal how low fashion’s market concentration truly is. This not only underscores the intensity of competition but also reflects the sector’s long-standing structural fragmentation — with most companies, large and small, vying to attract two key consumer segments: young people (under 35) and women.
Who has the potential
Straton identifies Abercrombie & Fitch and On Holding as companies with scaling potential that may currently be underestimated by the market. Conversely, the performances of Amer Sports, Gap and Under Armour may be overestimated. According to Morgan Stanley’s forecasts, Authentic Brands Group (ABG), which currently generates USD 32 billion, could approach the USD 100 billion milestone — effectively becoming the next fashion superpower. Morgan Stanley also cited Tapestry among the best-positioned holding companies.
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