Several Apparel Brands Hit by Controversies Over Xinjiang Supplies; Maintaining Valuations for Now

We are maintaining our fair value estimates for H&M, Burberry and Hugo Boss following the controversies in China in relation to sourcing cotton from Xinjiang suppliers allegedly involved in forced labour. H&M and Burberry were among European apparel firms we cover that have spoken out against sourcing from the region, which caused frustration among Chinese Internet users. Hugo Boss was also sourcing from the region. As a result, H&M was taken off all major Chinese e-commerce websites, its physical stores can no longer be found on major mapping service applications, and two celebrity ambassadors have stopped collaborating with the brand. Burberry’s collaboration with Tencent to design costumes for the popular game Honour of Kings was cancelled.