European clothing retail rebounds, Bank of America reports

Bank of America’s latest analysis shows a clear rebound in European apparel retail. After a weak April, sales accelerated sharply in May and June, with 20 of the 22 monitored markets posting stronger performance. Germany recorded a return to positive sales in June, while improved consumer confidence helped lift the UK market.

Demand in the United States also remained robust, driven by higher volumes and the impact of the World Cup. On the cost side, the rise in raw‑material prices eased noticeably in June, reducing pressure on profit margins for upcoming collections. Although freight costs stay elevated, falling oil prices following a de‑escalation in the Middle East are expected to gradually lower transport expenses. A stronger dollar, however, could raise supplier costs again by 2027.

Analysts say investor focus is shifting back to fundamental company metrics. They remain upbeat on groups with strong growth prospects such as Inditex and Zalando, while adopting a more cautious stance toward Associated British Foods (owner of Primark) and H&M, whose earnings forecasts have been downgraded. Forecasts for Next and Zalando have been revised upward ahead of forthcoming earnings releases.