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How Is Brexit Affecting the US Apparel Sector?

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Jun. 27 2016, Published 10:16 a.m. ET

The Brexit effect

The surprising vote in the United Kingdom on June 23 to leave the European Union sent stocks tumbling the next day. Brexit led to a fall of 3.6% in the S&P 500 and a drop of 3.4% in the Dow Jones index on June 24. The S&P 500 Apparel and Accessories Index, which is a seven-company index based on Ralph Lauren (RL), Hanesbrands (HBI), VF (VFC), Coach (COH), PVH (PVH), Michael Kors (KORS), and Under Armour (UA), erased YTD (year-to-date) gains and fell 5.4% on the day following the Brexit announcement.

The Consumer Discretionary Select Sector SPDR Fund (XLY), which invests 6.7% of its portfolio in apparel stocks, fell 3.7% as compared to the previous closing price.

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Apparel and accessory stocks slammed

While most of the apparel and fashion stocks were in the red after the Brexit vote, PVH was clearly the worst hit. The stock fell 8.9% after the company reported that it generated 3% of its revenues from the UK markets.

Other major losers in the apparel sector were Ralph Lauren (RL) (-7.9%), Michael Kors (KORS) (-6.3%), VF (VFC) (-5.7%), and Coach (COH) (-4.8%).

What you’ll find in this series

In this series, we’ll look at the effect of Brexit on apparel and fashion stocks. Our analysis will focus on the seven stocks in the S&P 500 Apparel and Accessories Index.

We’ll also analyze the impact of Brexit on PVH, since it has been hit the hardest. We’ll quickly look at the company’s past performance and future outlook and compare its current valuations to those of its peers.

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