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HERMÈS INTERNATIONAL (EPA: RMS)
The French luxury design group Hermès’ consolidated revenue reached €3,380 million in the first quarter of 2023 ending March 31, 2023. The revenue grew 23 per cent in terms of constant exchange rates and 22 per cent at current exchange rates. The sales reflected dynamism in all the geographical areas and across all the business lines. The group has strengthened its production capacities and consolidated its artisanal model with inauguration of its 21st leather goods workshop in Louviers in April beginning. The currency fluctuations, however, represented a negative impact of €21 million on revenue at the end of March. Hermès International did not redeem any shares, excluding transactions completed within the framework of the liquidity contract. No update on profitability was available at the time of reporting.
In its medium-term outlook, the group confirmed an ambitious goal for revenue growth at constant exchange rates. The highly integrated artisanal model, the balanced distribution network, the creativity of collections and the loyalty of clients encouraged the group to make a confident entry into 2023. Hermès will continue to pursue its long-term development strategy based on creativity, maintaining control over know-how and singular communication.
LVMH MOËT HENNESSY LOUIS VUITTON (EPA: MC)
In regard to its Q1 FY23 performance, another fashion group from France, LVMH Moët Hennessy Louis Vuitton reported a revenue of €21 billion – up 17 per cent compared to same period of 2022, the organic growth also being the same amidst the geopolitical and economic environment remaining uncertain. Except Wine & Spirits, all business segments grew in double digits. While leather and fashion goods segment increased 18 per cent to €10,728 million, the selective retailing grew highest at 30 per cent over the first three months of last year. Among markets, Europe and Japan enjoyed strong growth momentum, benefiting from robust demand from local customers and international travellers; US continued to grow steadily; and, Asia witnessed a significant rebound following the lifting of health restrictions. LVMH also restricted its reporting to sales performance only.
LVMH remained both vigilant as well as confident at the start of the year, and will continue to pursue its strategy focused on the development of its brands, driven by a sustained policy of innovation and investment as well as by a constant quest for quality in its products and their distribution.
HUGO BOSS (ETR: BOSS)
The German fashion company Hugo Boss continued its momentum of 2022 in the first quarter of 2023 as well, with strong financial and operational performance, posting significant top- and bottom-line improvements. The group’s sales of €968 million registered 25 per cent increment over €772 million in Q1 FY22. With growth rate remaining same in both the adjusted currency and constant currency terms, all regions recorded double-digit sales growth. On comparable basis, the revenues strongly exceeded pre-pandemic levels by 44 per cent in adjusted currency terms as compared to the last quarter of 2022. In Q1 FY23, the group generated operating profit i.e., EBIT of €65 million – an increase of 63 per cent, compared to €40 million the previous year, elevating EBIT margin by 160 basis points to 6.7 per cent. The increase was driven by the significant top-line improvements, which more than offset a slight decline in gross margin that was down 30 basis points to 61.4 per cent. The company is committed to continue with further investments into the business as part of its CLAIM 5 strategy.
The group raised its top- and bottom-line outlook for 2023: Sales increment of 10 per cent at €4 billion; and EBIT to increase in the range of +10 per cent to +20 per cent amounting to €370 - €400 million against a prior increase in the range of +5 per cent to +12 per cent (€350 to €375 million). Ongoing investments in its products, brands, and digital expertise as part of CLAIM 5 are set to be more than offset by an at least stable gross margin development in 2023, as well as further efficiency gains when it comes to its brick-and-mortar retail store network.
KERING SA (EPA: KER)
French luxury group Kering reported its Q1 FY23 revenue of €5,077 million – up 2 per cent on reported and 1 per cent on comparable basis, with trends improving throughout the quarter. The revenue in the directly operated store network, including e-commerce, rose 4 per cent on a comparable basis, with all Group Houses (brands) contributing to the growth. Although increase was driven by good momentum in western Europe and Japan, the North America region suffered from a downward revenue trend, while Asia-Pacific growth comprised a gradual recovery of the Chinese market adding to the region’s overall growth. Among Houses, Gucci generated €2,616 million in revenue (+1 per cent both on reported and comparable basis); Yves Saint Laurent’s (YSL) respective growth rates were 9 per cent and 8 per cent at €806 million; Bottega Veneta’s remained stable at €395 million; and Kering’s Other Houses were down 9 per cent reportedly as well as comparably. No other financial metrics was reported.
COLUMBIA SPORTSWEAR (NASDAQ: COLM)
In its April-released financial result, American Columbia Sportswear reported net sales of $820.6 million for the first quarter of 2023, increasing 8 per cent compared to first quarter of 2022. With operating income decreasing 33 per cent to $56.4 million (6.9 per cent of net sales) against last year’s $83.7 million (11 per cent of net sales), the company ended the quarter with $461 million of cash and short-term investments and no borrowings. The company’s diluted EPS reduced 28 per cent to $0.74 compared to $1.03 in Q1 FY22.
In full year outlook, the Portland-based company continues to target earlier forecasted net sales in the range of $3.57 to $3.67 billion, representing a growth of 3 - 6 per cent. The operating income range, however, contracted from earlier forecast of $413 - $448 million to $413 - $431 million, representing respective operating margin range of 11.6 - 12.2 per cent and 11.6 - 11.8 per cent. The revised diluted EPS will now be $5.15 - $5.40 against prior $5.15 - $5.55.
HANES BRANDS (NYSE: HBI)
NYSE-listed Hanes Brands reported its first quarter sales of $1.39 billion inclusive of a $31 million negative impact from foreign exchange rates. The sales were 12 per cent (10 per cent on constant currency basis) down from last year’s strong same quarter sales due to the macro-driven slowdown in consumer spending in the US and Australia. Though ahead of company’s projection, innerwear sales were still down 4 per cent from last year; activewear decreased 19 per cent; and international sales also declined 9 per cent on reported basis (3 per cent in constant currency) owing to decline in Australia and China markets despite growth seen in Europe, the Americas and Japan. The decline trend continued in Global Champion brand sales too – 17 per cent in reported terms and 15 per cent in constant currency. Consequently, the gross profit plunged 23 per cent to $450 million compared to last year’s result, translating into a 470 basis points decline to 32.4 per cent. Adjusted gross profit at $454 million (32.7 per cent) declined 440 basis points, while operating profit of $57 million during the quarter represented 4.1 per cent of net sales against $171 million (10.8 per cent) of last year.
Full year outlook for 2023 amounts to sales of $6.05 billion to $6.20 billion incorporating a projected headwind of approximately $40 million from changes in foreign currency exchange rates – a 1 per cent decline in constant currency and 2 per cent decline on reported basis; GAAP operating profit to remain in the range of $446 million to $496 million and adjusted operating profit between $500 million and $550 million including an estimated $5 million foreign currency exchange rate impact; and, adjusted earnings per share to range $0.31 – $0.42 with cash flow from operations to stay around $500 million.
ADIDAS AG (ETR: ADS)
World’s largest sports company Adidas reported flat currency-neutral revenues for the first quarter of 2023, as a result of its initiatives to reduce high inventory levels, particularly in North America and Greater China. The discontinuation of the Yeezy business additionally impacted the top line developments to the tune of €400 million, on y-o-y comparison especially in North America, Greater China and EMEA regions. Channel wise, the wholesale business grew 3 per cent (in constant currency) mainly driven by strong performance in EMEA, Asia-Pacific and Latin America; D2C channel revenues declined 7 per cent against prior year; and e-commerce declined 23 per cent as the vast majority of Yeezy products used to be sold through Adidas’ own online channel. The company’s own retail stores reported 11 per cent increase though.
The gross margins fared no better as they were down 5.1 percentage points to 44.8 per cent versus 49.9 per cent in Q1 FY22, mainly driven by the increase in supply chain costs as well as higher discounting in the marketplace, the company reasoned out. The operating profit of €60 million translated into an operating margin of 1.1 per cent. Net loss after taxes amounted to €24 million (€310 million last year); basic EPS from continuing operations decreased to negative €0.18 from positive €1.60 in 2022.
For full FY23 Adidas continues to expect the constant currency revenues to decline at a high-single digit rate.
DILLARD’S INC. (NYSE: DDS)
Dillard’s, Inc. reported its first quarter ending April 29, 2023 results on May 11, 2023. Though management termed the results as good in the context of a challenging tenure, none of the key performance metrics could outperform previous year’s numbers. On quarter-to-quarter comparison, the company’s both total retail and comparable store sales decreased 4 per cent; net income was down from $251.1 million to $201.5 million; retail gross margin changed to 45.6 per cent from last year’s 47.3 per cent of sales; EPS reduced to $11.85 from $13.68; ending inventory increased 3 per cent; and operating expenses rose to $406.4 million (25.7 per cent of sales) from $400.8 million (24.9 per cent) a year prior. The latter half of the quarter witnessed declined customer activity – is how the company explained this performance. The company repurchased stock worth $113.8 million and still had $955 million in cash and short-term investments remaining with it. No announcement in regard to full year outlook was made.
The company operates 247 Dillard’s locations and 27 clearance centres spanning 29 states over 47 million sq ft of area, and an internet store.
CARTER’S INC. (NYSE: CRI)
Atlanta-based Carter’s reported a weak performance during Q1 FY23. The net sales on consolidated basis decreased $85.4 million (10.9 per cent) to $696 million, compared to Q1 FY22 sales of $781.3 million. The company cited microeconomic factors such as inflation, which drove lower demand from consumers and wholesale customers – US Retail comparable net sales declining 12.9 per cent. The foreign exchange rates had unfavourable effect on consolidated net sales of approximately $2.2 million or 0.3 per cent. The operating income decreased $46.3 million (45.1 per cent) to $ 56.4 million ($102.6 million in Q1 FY22), bringing down the operating margin from 13.1 per cent last year to 8.1 per cent this year mainly due to fixed cost deleverage on lower sales, channel mix of sales, and higher inbound freight costs, partly offset by lower air freight expenses. Net income decreased $3.19 million to $36 million or $0.95 per diluted share, compared to $67.9 million or $1.66 per diluted share in Q1 FY22.
For Q2 FY23, the company expects approximately $590 million – $605 million in net sales, $30 million – $35 million in adjusted operating income, and $0.40 – $0.50 in adjusted diluted EPS. For full fiscal 2023, the company reaffirmed its prior guidance.
Fibre2Fashion News Desk (WE - SB)