Is Luxury Really Recovering?
A new year brings a new round of gold March & silver April of recruitment season. Many candidates have a sense of luxury goods industry recovery, said that being surrounded by a lot of positions and opportunities dazzles their eyes. So is luxury really recovering?
The following is based on the data summary of the first quarter of 2016 earnings by LADYMAX.cn, covering luxury brands, light luxury, fast fashion, sports brands and jewelry brands.
LVMH shares in the past six months fell 6.04% market value of about 69.12 billion Euros.
The phenomenon of slow growth in luxury goods industry deteriorated again, according to LVMH Group, fashion and leather sector of its LV, Dior, Givenchy, Celine and other brands suffered growth stagnation in the first quarter. By March 31, the Group's turnover increased by 3.6% to recorded 8.62 billion euros (about 9.6 billion US dollars) in the first three months, while its turnover increased by 4% excluding exchange rate effects, lower than analysts expected. The Group noted that the weak growth in performance was mainly due to the negative impact of European social instability and the weakness of the Hong Kong market. The Group's growth in the fashion and leather sector was zero, far below the 2.5% revenue growth predicted by analysts, and the growth of the sector in the former two quarters recorded about 3%.
- Christian Dior
Dior fashion department belonging to the LVMH Group published earnings statement. For the first three months of March 31, the company's turnover fell 1%, recorded 429 million Euros, mainly affected by the impact of several Asian weak markets. While at the same time last year, Christian Dior fashion department turnover rose 20%. According to reports, Christian Dior total turnover, including fashion and beauty brand this year may exceed 5 billion Euros ($ 5.63 billion), but there are signs that the strong performance of Dior fashion department has begun to lose.
Hermes shares in the past six months rose 9.32% market value of about 35.98 billion Euros.
Hermes said, the slowdown in turnover in the first three months of the year was mainly due to the tourists decrease since the terrorist attacks in Brussels and Paris and the slowdown in China's economy. Sales in the first quarter rose 6.1% to recorded 1.19 billion Euros, compared to the double-digit growth in the same period last year, the latest quarterly results growth is weak. For the first quarter ended March 31, sales of Hermes leather products rose 15.5%,while its silk fabric sales fell 9.5%, perfume sales fell 3.5%, watch sales fell 3.3%, clothing and fashion accessories sales fell 2.3%, other product categories, including jewelry and home products sales plunged 18.2%. Access detailed data
- Kering Group
Kering Group shares in the past six months fell 6.17% market value of about 18.71 billion Euros.
French luxury goods group Kering Group said that due to the reduction of tourism in Europe, the quarter group revenue is lower than analysts expected. Sales rose 2.7% to 2.72 billion Euros, lower than analysts' expectation of 2.78 billion euros. Excluding exchange rate effects, the quarter group sales rose 4%, still less than the 5.6% of analysts expectation. Among that, the sales revenue of luxury part was 1.804 billion Euros, an increase of 2.6%; year-on-year growth of Gucci sales was 3.1%; the sales revenue of sports and life part was 913 million euros, an increase of 7.0%. Access detailed data
Richemont shares in the past six months fell 20.46% market value of about 29.94 billion Swiss francs.
As of March 31 within this fiscal year, sales of Swiss luxury goods group Richemont rose 6.4% to 11.8 billion Euros. In the case of constant exchange rates, sales fell by 1%, mainly caused by the decline passenger flow of high-profit market in Hong Kong and Macau and weak consumer demand.
Johann Rupert points out those sales in the Asia-Pacific region continued to weaken due to no recovery in Hong Kong and Macau, but sales in mainland China is good, sales in April soared 26%. Richemont Group revealed that the merger of Yoox Net-a-porter brings $ 703 million revenue for the company.
Burberry shares in the past six months fell 2.66% market value of about £ 5.2 billion
As of March 31, in the fiscal year 2015-2016, pre-tax profits of Burberry fell 10% to 421 million pounds ($ 608 million). The company's annual revenue fell 1%, recorded 2.51 billion pounds. Year-on-year turnover fell 1%, but excluding the negative impact of Hong Kong and Macao, turnover increased by 3%.
Some analysts and investors doubt that whether Burberry's CEO Christopher Bailey can effectively lead the company out of the low profit, Burberry in April released forecast, predicting the expected annual income may be lower than expected bottom line, the pressure on Christopher Bailey is growing bigger. In addition, brexit may also affect the profits of the luxury group.
Ferragamo shares in the past six months fell 15.34% market value of about 3.11 billion Euros.
The first quarter of this year, the Italian luxury goods group Ferragamo (Salvatore Ferragamo SpA) turnover fell 1.8%, from 327 million Euros ($ 366.6 million) last year to € 321.5 million ($ 353.1 million), mainly due to the slowdown in global economic growth, political instability and reduced tourism. Despite a slight contraction in revenue, the net profit growth of company's first quarter is still double-digit to 10.7%, and it has been confirmed that FURLA former CEO Eraldo Poletto will become the company's new CEO.
In the first quarter, Ferragamo performed poorly in the Asia-Pacific region, especially in China and Hong Kong. The two major markets which usually account for 36% of the Group's performance suffer revenue shrank by 3%, 2.3% in the case of constant exchange rate.
Italian luxury brand Valentino sales rose 9% in the first three months of this year to 256 million Euros, compared with 234 million Euros last year. Sales in all markets have increased, with double-digits percentage growth in the United States and Japan. According to financial data, Valentino reported sales of $ 1.09 billion last year, up 48% from $ 80.84 million in 2014, and the company expects sales to continue to double-digit growth in 2016.
- Hugo Boss
Hugo Boss shares in the past six months fell 34.45% market value of about 3.53 billion Euros.
German luxury apparel brand Hugo Boss today announced the first quarter of 2016 earnings, under the influence of increasing discount activities in the US market, weak product sales and the increasing company operating costs, the Group's net profit plunged 49% to 38.5 million Euros, the Group's sales fell 3% to 642 million Euros.
In March this year, the Group decided to close 20 stores in China, while retail-related investment will be reduced to less than 200 million Euros. Hugo Boss CFO Mark Langer once said that improving sales performance is more important than retail network expansion, less than 20 new stores was planned in 2016 while 72 new stores in 2015.
- Ralph Lauren
Ralph Lauren shares in the past six months fell 19.20% market value of about 7.45 billion US dollars.
Due to excessive inventory impact on sales, its profits and turnover continued to suffer heavy losses. As of April 2, the first three months of the company's profits plunged 67%, recorded 41 million US dollars, while the income was relatively flat, 1.9 billion US dollars. The main reasons are the cost of restructuring, the amount of tourists fell and excessive inventory, resulting in excessive discount activities. The company's change was led by the new CEO, Stefan Larsson, who took over from Ralph Lauren in November last year, and his pressure has never diminished.
- Michael Kors
Michael Kors shares in the past six months rose 25% market value of about 8.73 billion US dollars
As of April 4, the fourth quarter, revenue of the United States light luxury brand Michael Kors was 1.2 billion US dollars, increased by 11% compared with $ 1.08 billion in the same period last year. Net profit of $ 176.3 million, lower than $ 182.6 million in the same period last year. Retail sales rose 22%, mainly due to the company opened new 142 stores since the end of the fourth quarter, and from e-commerce sales growth of the digital flagship stores, same-store sales rose 0.3%.
Coach shares in the past six months rose 24% market value of about 11.33 billion US dollars.
Light luxury brand Coach achieved progress in reform, brand development momentum is accelerating, Coach's third-quarter profit rose to $ 112.5 million, compared with $ 88.1 million of the same period last year. Revenue rose from $ 929.3 million to $ 1.03 billion. The number of its self-operated stores in North America in this season declined from the original 460 to 446. Analysts said that the introduction of the company's high-end fashion clothing series "1941 series" has successfully enhanced the Coach brand image.
- Kate Spade
Kate Spade shares in the past six months rose 18.4% market value of about $ 2.64 billion.
Light luxury brand Kate Spade & Co achieved net profit of $ 11.6 million in the first quarter, compared with $ 55.2 million for the same period last year. Revenue for the quarter totaled $ 274.4 million, better than $ 255.3 million in the same period last year. Conlumino retail research firm analyst Hakon Helgesen said, “Kate Spade's clear brand positioning and uniqueness, which is better than other brands such as Coach and Michael Kors, makes it able to attract more users, and to sell exclusive products at a higher price, without the need to count on discount promotions.”
Clothing and retail
- PVH Group
PVH Group shares in the past 6 months rose 29% market value of about 7.62 billion US dollars
US fashion brand Calvin Klein parent company PVH Group released its first quarter results report, although the current fashion retail is generally sluggish, the Group profit growth was above analyst expectations. Group's first quarter net profit rose to $ 231 million, twice the same period last year. As of May 1st this year, the Group's net sales rose to $ 1.818 billion in the first three months. Among them, Calvin Klein's sales rose 13% to $ 739 million, Tommy Hilfiger's sales rose 4% to $ 797 million.
- VF Corporation
VF Corporation shares in the past six months rose nearly 1% market value of about 25.64 billion US dollars.
apparel company VF whose brands include The North Face, Wrangler and Lee, recorded a net profit of $ 2.6027 billion in the first quarter and $ 288.7 million for the same period last year. Revenue for the quarter was $ 2.84 billion, unchanged from the previous year and slightly higher than market expectations of $ 2.82 billion. Inventories rose 9% compared to the same period last year, of which about half are autumn and winter clothes.
- L Brands
Victoria's Secret parent company, L Brands, fell nearly 30% in the past six months market value of about $ 19.3 billion.
For the quarter ended April 30, 2016, the Group's net sales increased 4% to $ 2.62 billion and profit recorded $ 152.3 million, same-store sales increased by 3%. By brand, Victoria's secrets totaled $ 1.74 billion in the first quarter of this year, while Bath & Body Works was $ 660 million. Victoria’s Secret would stop selling swimsuit by the end of 2016, as early as L Brands announced the layoffs of 200 people, planned to reorganize the structure and cut some categories of goods. Victoria's secret performance continued to decline, some analysts pointed out that from the performance trend, behind the underwear business in this value of billions of dollars, the company has the reason to feel trembling for the trend.
American Denim Garment Group Levi Strauss&Co achieved success in the contrarian, first-quarter net profit rose 71% to $ 6.6 million, and its Dockers brand has turned around, women's business for three consecutive quarters recorded double-digit growth. As of February 28, the Group's net operating income increased slightly to $ 1.057 billion, compared with recorded $ 1.055 billion in the same period last year. While net profit rose 71 percent from $ 3.8 million last year to $ 6.6 million.
Guess shares in the past six months fell 22.23% market value of about 1.27 billion US dollars.
Guess Inc's first-quarter profit fell by a total of recorded $ 25.2 million, compared with $ 448.8 million in the same period last year. Earnings reports show that GUESS income comes from three parts: retail, wholesale and brand licensing. In terms of retail sales, the most difficult areas are Asia, with net income of $ 54.1 million, a decline of 15%. GUESS CEO Victor Herrero noted that despite the huge investment, Greater China's performance was lower than expected.
Zara parent company Inditex shares in the past six months fell 5.3% market value of about 94.45 billion euros.
ZARA is making H & M, UNIQLO feel panic, its parent company Inditex ignores the bad weather and economic turmoil and keeps the high growth. Inditex Group's first quarter turnover of 4.88 billion euros ($ 5.46 billion), up 12% over the same period last year, more than 4.84 billion Euros of FactSet analysts earlier expected. At constant exchange rates, revenue rose 17% between February 1 and April 30 and net profit rose 6% to € 554 million ($ 620 million). This strong momentum has been extended to the second quarter of fiscal year, in the May 1 to June 13 period, the turnover soared 15% on the basis of constant exchange rate.
- H & M
H & M shares in the past six months fell 16.6% market value of about 368 billion kronor.
First half performance of Swedish fast fashion retailer H & M fell into a quagmire, profits plummeted 21.5% to 7.9 billion kronor (about 9.455 billion US dollars). For the six months ended May 31, H & M Group's pre-tax profit plunged 22% to C $ 10.33 billion (US $ 1.24 billion), during this period, taxable growth of 5% recorded a total of 104.97 billion kronor (about $ 12.5.6 billion), an increase of 7% in local currency. Compared to the same quarter last year with a nearly double-digit growth rate, apparently, H & M is sliding into the slowdown channel.
In the second quarter, the H & M Group's turnover recorded only SEK 54.34 billion (US $ 6.59 billion) with a growth rate of 2%, while net profit fell 16.9% to HK $ 5.36 billion (US $ 650.5 billion).
UNIQLO parent company Fast Retailing Co., Ltd. shares in the past six months fell 36% market value of about 2.9 trillion yen.
UNIQLO parent company Fast Retailing, a fast fashion company in Japan, released semi-annual report for fiscal year 2015, with net profit declining 55.1% from the same period last year, only 47 billion yen, which is the first fall of semi-annual net profit in nearly five years. Fast Retailing’s profit in the second quarter of this year deteriorated, and the company lowered the expected annual income for the second time. The company explained, mainly affected by the global warming, consumer demand for winter clothing decline, and the first three quarters of the fiscal year, company profit fell 30.2%.
Gap shares in the past six months fell 13.36% market value of about 8.44 billion US dollars.
As of April 30, Gap Group's first quarter net profit plunged 46.9% to $ 127 million, earnings per share of 32 cents at the same level of analysts’ expectations; Net sales fell 6% to $ 3.44 billion. It is reported that the company announced its dismal performance in the first quarter, Gap Group decided to close 53 Old Navy stores mainly in Japan and other regions. Gap Group has struggled in the past few quarters, coupled with the pressure from competitors H & M, Forever 21 and Zara, sales continued weakness.
- Urban Outfitters
Urban Outfitters rose 22 percent in the past six months to about $ 3.22 billion.
US apparel group Urban Outfitters announced its first quarter of 2016 fiscal year earnings. As of April 30, the Group's net profit fell 9.8% from $ 34.8 million in the same period last year to $ 29.6 million, and net sales rose 3% to $ 763 million, compared with $ 739 million in the same period last year. By brand, Urban Outfitters net sales rose 2%, Anthropologies net sales kept flat, Free People net sales fell 2%; while the wholesale channel net sales rose 16%.
- Abercrombie & Fitch
Abercrombie & Fitch shares in the past six months fell 33% market value of about 1.2 billion US dollars.
As the naked male gimmick marketing come to an end, American clothing brand Abercrombie & Fitch is abandoning male marketing. With the bleak performance of first quarter, both earnings per share and overall revenue are lower than Wall Street's expectations. As of April 30, for the first three months, the Group's net loss narrowed to 39.6 million US dollars, compared to the same period last year, a net loss of 63.2 million US dollars; Net turnover from last year's 709.4 million US dollars fell to 685.5 million US dollars, a decline of 3.4%, and earlier forecast of Wall Street predicted an operating income of $ 710.3 million; Year-on-year store sales fell 4%, by brand, Abercrombie & Fitch turnover fell 5%, Hollister fell 2%.
Nike shares in the past six months fell 11% market value of about 93 billion US dollars.
Global sports brand giant Nike recently released its fourth quarter and 2016 fiscal year report. The company's fourth quarter made a net profit of $ 846 million, beyond Wall Street expectations. Total revenue of $ 8.24 billion was less than Wall Street expected $ 8.26 billion, which made Nike's second consecutive quarters of income not up to expectations.
After the release of earnings, its share price in the transaction after opening fell sharply, once fell nearly 7%, once again led the investors to concern that the world's largest sports brand has entered a slowdown in growth. In addition, as a key indicator to Nike investors, Nike futures orders data is not up to expectations, the order grew 11%, below the Consensus Metrix analyst's forecast of 13%. Access detailed data.
- Under Armor
Under Armor shares in the past six months fell 50% market value of about 8.73 billion US dollars.
According to the first quarter results announced by Under Armor on April 22, thanks to the high popularity of basketball player Stephen Curry, the company's first quarter profit soared 63%, recorded 19 million US dollars, compared to the previous year's data for 12 million US dollars. Under Armor has two consecutive quarters of double-digit sales growth, with the quarterly operating income of 1.05 billion US dollars. But executives leaving tide of Under Armor in May makes investors in a panic that stock prices may fall sharply.
Adidas shares rose 42.5% in the past six months to about 26.8 billion Euros
According to the first quarter results released by Adidas Group, as of March 31, the Group's net profit soared 38% to 350 million Euros (about 386.1 million US dollars), sales increased 17% to 4.8 billion Euros (about 5.29 billion US dollars), operating profit increased 35% to 4.9 Billion euros (about $ 540.5 million). Sales profit accounted for 22% of total profit. Promoted by the strong performance of the classic Stan Smith and the new launch of the NMD series of shoes, the German sports giant Adidas Group usher in a new growth period.
Puma shares in the past six months rose 2.2% market value of about 3.06 billion euros.
German sports brand Puma announced the latest quarterly earnings as of March 31, Women's footwear grew strongly under the impetus of Rihanna, which has grown for the seventh consecutive season. The brand operating profit has a growth of 10.1% over the same period last year, and its net profit rose 4% recorded 25.8 million Euros, becoming one of the most eye-catching brands of Kering Group. Currently Kering Group owns 86% of Puma's shares. In the first three months of this year, sales revenue recorded € 851.9 million, an increase of 7.8% after the exchange rate impact, of which sales in China were strong and recorded an increase of 11.2%.
- Chow Tai Fook
Chow Tai Fook shares in the past six months rose 11.2% market value of about 55.6 billion Hong Kong dollars.
Hong Kong-listed jewelry brand Chow Tai Fook yesterday evening announced annual results as of the end of March. By the overall jewelry retail downturn, the Group profit fell 46.1% year on year recorded 2.941 billion RMB. As today's stock market opened, shares fell more than 2.5% recorded 5.73 Hong Kong dollars, the current market value of 57.3 billion Hong Kong dollars.
According to the data, the Group's turnover fell 12% year on year to 56.592 billion RMB, gross profit fell 18% to 15.641 billion RMB, the adjusted gross margin fell to 28.9% from 29.2% in 2015 fiscal year, including mainland jewelry business and Hong Kong and Macao same-store sales representing a decrease of 10.3% and 21.7% respectively.
Tiffany shares in the past six months fell 19.6% market value of about $ 7.64 billion.
US jewelry brand Tiffany (Tiffany & Co.) announced the first quarter of 2016 earnings. The company's operating income fell 7.4 percent to $ 891.3 million, well below the expected $ 294.1 million; profits plummeted 16.7%, which is already six consecutive quarters of decline. Tiffany's same-store sales worldwide fell 9% on average, far worse than analysts' forecasts 4.6%. Asia-Pacific markets and European same-store sales fell 15%, while Japanese same-store sales fell 10%. With the exception of Japan's Asian markets, Hong Kong's sales have been hardest hit because of reduced consumer spending, offsetting sales growth in mainland China and South Korea.
PANDORA shares in the past six months rose 3.61% market value of about 105.7 billion Danish krone.
First quarter revenue of Danish jewelery company Pandora (PANDORA) soared, and net profit was more than expected. The company's first quarter revenue grew 34% year-on-year, from 3.55 billion DK last year to 4.74 billion DK. Net profit more than doubled to HK $ 1.31 billion (US $ 200.6 million), compared to HK $ 383 million in the same period last year. Pandora Jewelry Company has a total of more than 9,000 chain stores.
After reading these data, do you still feel the luxury recovery? In fact, no. Compared to the luxury goods industry, fast fashion and sports brands are also facing a severe crash situation. Unexpectedly, clothing retail and light luxury are all the way to rapid growth. So how can luxury goods industry to turn the tide?
Combined with the recent recruitment needs, luxury goods are in the second phase of restructuring. Having experienced a decade of blowout, in the last ten years, luxury goods are facing a variety of adjustment and transformation. Whether it is strategic adjustments, or structural adjustment, will be the only way to luxury transformation. Strategically, brands are more using experienced professional managers with experience of either the dealer or retail management, and hope them to give the brand more constructive improvement through their past experience.
On the other hand, brands began to use the online platform more and more, which for E-commerce and .com management has long been a recent favorite. But have you noticed that the rise of academy school wave in a considerable number of brand companies. For management training, induction training, and even L & D, they want to have a dedicated department to be responsible. As we can tell, the quality of staff, as well as the control of staff turnover rate, has been put on an urgent agenda by the major brands.
Of course, it is also common to many brands transform from the dealer or agent model to regular stores. This is mainly to embrace the huge change in the current pattern of consumer behavior. People no longer visit the store, but more tend to shop online. Consumers are no longer price-sensitive, but more concerned about the consumer experience and services. These all makes brands to put the data, services and online platform as the most important priority in development.
Driven by the future consumption situation, we still want to see the recovery of the traditional luxury goods industry. But that in what kind of posture will it be to recovery and re-lead the public to the forefront of fashion, is no longer just the designers ' job. Let’s look forward to luxury goods bringing us a surprise recovery one day!