Fashion Companies

Weak: No Growth in Either Sales or Profits

Hanesbrands Inc (NYSE: HBI)

Winston-Salem (New Carolina)-headquartered and NYSE-listed Hanesbrands, Inc is a global player of iconic apparel brands, including Hanes, Champion, Maidenform, Bali, and Bonds. The apparel company announced fourth quarter (Q4) and full FY23 results on February 15, 2024.

In the fourth quarter, net sales of $1.3 billion decreased by 12 per cent (10 per cent on constant currency basis) compared to the same quarter last year. However, operating profit and operating margin improved to $96 million and 7.4 per cent, compared to prior year’s $60 million and 4.1 per cent, respectively.

Net sales for the entire fiscal decreased by 9.6 per cent from $6.234 billion to $5.636 billion while net loss improved from $127.20 million to $17.73 million. The company closed the sale of its US Sheer Hosiery business in September of 2023, which generated $50 million ($20 million in Q1, 2023) of net sales and an operating loss of $2 million ($1 million of operating profit in Q1) during 2023.

In its 2024 (ending December 28, 2024) guidance, the company expects net sales of approximately $5.35-5.47 billion, including projected headwinds of ~$50 million from the US Hosiery divestiture and ~$35 million from changes in foreign currency exchange rates. This represents a ~4 per cent decrease on a reported basis and a ~2 per cent decrease on an organic constant currency basis. GAAP operating profit from continuing operations to stay in the range of ~$430-450 million and adjusted operating profit from continuing operations of ~$500-520 million.

Delta Galil Industries (TASE: DELG)

Caesarea (Israel)-based Delta Galil Industries Ltd’s financial results were announced on February 26, 2024. The global manufacturer and marketer of branded and private label intimate, activewear, loungewear and denim apparel for ladies, men, and children, ended fourth quarter and full year on December 31, 2023.

For the company, the fourth quarter sales decreased by 7 per cent (6 per cent in constant currency) to $508.6 million, driven by the continued slowdown in global consumer spending; fourth quarter online sales of the company’s own brands increased 16 per cent; gross margin improved 340 basis points to a fourth quarter all-time record of 43.1 per cent; EBIT before non-core items was $56.2 million, or 11 per cent of sales compared to $56.9 million, or 10.5 per cent of sales, for the same period last year.

Announcing full year performance, the company reported sales decrease of 9 per cent (8 per cent in constant currency) to $1,857.7 million though the online sales of the company’s own brands increased 17 per cent; gross margin improved 230 basis points to an annual record of 40.9 per cent; EBIT before non-core items was $153.0 million ($190.2 million in prior year), or 8.2 per cent of sales (9.4 per cent of sales in prior year); and, EBIT for the full year 2023 was $144.9 million, compared to $185.1 million in last year.

Strong: Growth in Both Sales and Profits

Marimekko (HEL: MEKKO)

Finnish lifestyle design company renowned for its original prints and colours, Marimekko’s full year results, including Q4 performance, were announced on February 15, 2024. Announcement reported that fourth quarter’s net sales of €50.6 million (~$54.96 million) increased by 5 per cent.

In FY23, net sales including international sales of the company continued to grow along with improvement in operating profit. Net sales grew 5 per cent and amounted to €174.1 million (~$189.12 million) compared to €166.5 million last year, due to increased international wholesale sales (+10 per cent) as well as good development in Finnish retail sales. Operating profit was €31.4 million (~$34.11 million) and comparable operating profit totalled €32 million (~$34.76 million) equalling to 18.4 per cent of net sales.

In 2024, the company with product portfolio of high-quality clothing, bags and accessories as well as home décor items ranging from textiles to tableware, expects to exceed FY23 net sales of €174.1 million (~$188.35 million) with comparable operating profit margin estimated to be in the range of 16 to 19 per cent, thereby improving FY23 performance.

The board of directors will propose to the AGM a dividend of €0.37 ($0.40) to be paid for 2023, with April 25, 2024, as the dividend payout date.

As of December 31, 2023, the company runs a total of 167 Marimekko stores and shop-in-shops worldwide.

Ludwig Beck (ETR: ECK)

Munich-based fashion group Ludwig Beck am Rathauseck Txtlhs Fldmr AG experienced a mixture of ups and downs in the 2023 fiscal, as reported in its financial result on March 21, 2024.

In FY23, Ludwig Beck (including online) generated gross sales of €86.5 million or ~$94 million (previous year: €83.8 million), inclusive of €63.7 million (previous year: €60.8 million) contribution by ‘textile’ segment and €22.8 million (previous year: €23 million) contribution by ‘non-textile’ segment.

The retail group offers fashion for both men and women, perfumery, lifestyle, music and more.

Gross profit rose from €35 million or ~$38 million to €35.3 million or ~$38.2 million, although the gross profit margin of 48.5 per cent was below the previous year's figure of 49.8 per cent due to higher price discounts. In the fiscal, Ludwig Beck AG generated net income of €1 million (previous year: (-) €0.6 million). Of this amount, €0.5 million was allocated to other revenue reserves.

The executive board and supervisory board will propose to the AGM distribution of a dividend of €0.15 (~$0.16) per share from the remaining balance profit for the 2023 fiscal.

In 2024, the management expects gross sales between €90 million (~$97.39 million) and €93 million (~$100.64 million) and EBT between €0.50 million (~$0.54 million) and €1.8 million (~$1.95 million).

Fashion E-commerce Companies

Strong: Growth in Both Sales and Profits

Showroomprivé Group (XPAR: SRP)

The French Showroomprivé (SRP Groupe), based in La Plaine Saint Denis, France, is a European group specialised in smart shopping, which announced its results for the fiscal ended December 31, 2023, as approved by the board of directors, on March 14, 2024.

For the first time, Showroomprivé achieved a GMV of €1 billion (~$1.08 billion), representing a 6.3 per cent increase compared to the previous fiscal. This growth reflected the ramp up of the business units including the marketplace or the travel and leisure segment. Revenue amounted to €677.7 million (~$733 million), up by 3.0 per cent compared to 2022, despite economic deterioration in the latter part of the year affecting second-half activity (-3.0 per cent vs. H2, FY22), particularly in Q3. As a result of the premiumisation of the product mix and strict control over purchasing prices, gross margin increased by €14.1 million (~$15.26 million) over the year to 38.2 per cent as a proportion of revenue (compared to 37.2 per cent in 2022). The EBITDA rose to €23.6 million (~$25.53 million) for the fiscal, a 21 per cent increase compared to 2022, corresponding to a 52 basis point increase in margin to reach 3.5 per cent.

Launched in 2006, Showroomprivé is an innovative European player in the online private sales industry, specialised in fashion. Showroomprivé offers a daily selection of more than 3,000 brand partners via its mobile apps or website in France and six other countries.

Moderate: Growth in Either Sales or Profits

Zalando SE (ETR: ZAL)

In 2023, Zalando met its revised guidance for GMV and revenue, and even achieved the top end of its adjusted EBIT range. In 2023, GMV decreased 1.1 per cent to €14.6 billion (~$15.8 billion) and revenue declined 1.9 per cent to €10.1 billion (~$11 billion). Full-year adjusted EBIT rose to €350 million (~$379 million) from €185 million, resulting in an adjusted EBIT margin of 3.5 per cent, up 1.7 percentage points from 2022.

Founded in Berlin in 2008, Zalando owns a Pan-European ecosystem for fashion and lifestyle e-commerce around two growth vectors—B2C and B2B. While B2C offers multi-brand shopping experience for fashion and lifestyle products to about 50 million active customers in 25 markets, B2B uses logistic infrastructure, software, and service capabilities to help brands and retailers run and scale their entire e-commerce business, on or off Zalando.

In Q4, FY23, the share of partner business in the fashion store’s GMV increased by almost 2.8 percentage points to 39.2 per cent and the share of items shipped by Zalando Fulfillment Solutions increased by 4 percentage points to 62 per cent. Zalando focused on increasing profitability and improving the gross margin during the quarter resulting in a 25 per cent rise in adjusted EBIT to €183 million (~$198 million), in-line with market expectations.

In 2024, Zalando expects GMV and revenue to grow 0 to 5 per cent and will continue to focus on profitable growth with margin progression. It expects adjusted EBIT to be between €380 million (~$411 million) and €450 million (~$487 million).

Luxury Fashion Companies

Strong: Growth in Both Sales and Profits

Brunello Cucinelli S.p.A. (BIT: BC)

The board of directors of Brunello Cucinelli S.p.A.—an Italian Casa di Moda (fashion house) operating in the luxury goods sector, listed on the Italian Stock Exchange (Euronext)—reviewed and approved the consolidated financial statements and the draft financial statements as of December 31, 2023, on March 14, 2024.

According to the statement, the total revenues amounted to €1,139.4 million (~$1,232 million), growing 23.9 per cent (up 26.0 per cent at constant exchange rates), the EBIT rose to €187.4 million (~$202.58 million), up 39.4 per cent on y-o-y comparison, and net profit reached €123.8 million (~$134 million), registering a growth of 42 per cent. The consolidated financial statements showed a very solid income statement structure, with an EBIT margin of 16.4 per cent, and a healthy profit ratio of approximately 11 per cent.

During the fiscal, all markets made a positive contribution to the results achieved: America grew 21 per cent, Europe 17 per cent, and Asia 40 per cent, with revenue shares of 38 per cent coming from Europe, 35 per cent contributed by America and 27 per cent by Asia. The year ended with 125 operational retail boutiques.

Great performance in the first few months of 2024, the order intake for the Fall/Winter 2024 collections and the planning of selected exclusive openings made the management forecast 10 per cent growth in sales, and healthy and balanced profits for the year.

The board of directors will propose the distribution of a dividend of €0.91 (~$0.98) per share, gross of any withholding taxes, in the next shareholders’ meeting scheduled for April 23, 2024, payable on May 22, 2024.

Strong: Growth in Both Sales and Profits

Prada Group (HKG: 1913)

The Italian Prada Group designs, manufactures and distributes ready-to-wear (RTW) collections, leather goods and footwear in over 70 countries via a network of 600+ stores as well as e-commerce channels, selected e-retailers and department stores around the world. The Group’s financial performance for FY23 ended December 31, 2023 was reported on March 7, 2024.

In terms of constant currency, the Group’s net revenues of €4.7 billion (~$5.11 billion) grew 17 per cent over revenues in FY22, fuelled by high desirability of both Prada and Miu Miu brands. Retail sales of Prada brand increased by 12 per cent and 10 per cent on yearly and quarterly comparison basis, respectively, with corresponding growths in brand Miu Miu being 58 per cent and 82 per cent. As of markets, Japan delivered outstanding performance followed by Asia-Pacific and Europe.

While Group’s EBIT was €1.1 billion (~$1.19 billion) or 22.5 per cent margin, the net income was €671 million (~$729 million), up 44 per cent y-o-y, with net cash position of €197 million (~$214 million) after €759 million of capex cash-out.

Fibre2Fashion News Desk (WE - SB)