European luxury companies deliver strong performance in Q2 & H1 FY23

HERMÈS INTERNATIONAL (EPA: RMS)

In July, French luxury group Hermès International reported an outstanding second quarter and half yearly FY23 (ended June 30, 2023) performance. The group’s sales in Q2 FY22 were €2,710 million, which reached €3,317 million in Q2 FY23, growing at 27.5 per cent in constant exchange rates and 22.4 per cent on reported basis driven by a strong momentum across all business lines and regions. On a half yearly basis, the comparable sales were €6,698 million in 2023 against €5,475 million in 2022 that reflected 22.3 per cent growth on reported basis and 25.2 per cent in constant exchange rates. The half yearly recurring operating income reached €2,947 million (44 per cent of sales) and net income touched €2,226 million or 33 per cent of sales.

Amidst the group’s continued investment in its production capacities, and in the network expansion while accelerating job creation and training during the year, the management credited the performance result to the strength of pillars of its artisanal model encompassing quality of materials, exceptional know-how and abundant creativity.

HUGO BOSS (ETR: BOSS)

In its early August release, the German fashion company reported a strong growth trajectory in Q2 FY23, resulting in a raise in full year 2023 outlook. The company’s CLAIM 5 strategy yet again proved instrumental in delivering second successful quarter of 2023. The strategy that includes several brand, product and distribution initiatives, helped maintaining significant top- and bottom-line improvements resulting in broad-based growth across both brands, all regions and all channels. The group’s sales increased 20 per cent in adjusted currency terms to €1,026 million against €878 million in same quarter last year, and 17 per cent in constant currency. Revenues reported to have exceeded pre-pandemic levels (up 52 per cent in adjusted currency); operating profit increased 21 per cent amounting to €121 million over previous years’ €100 million.

The encouraging results allowed Hugo Boss to raise its expectations for FY23, over and above former guidance released in May. Now the Metzingen-headquartered company is expecting sales to increase between 12-15 per cent (€4.1 billion-€4.2 billion); and EBIT to increase between 20-25 per cent to a level between €400 million-€420 million in 2023. FY23 will mark another important milestone for the company towards achieving its updated 2025 financial ambition, only raised back in June. Hugo Boss is projected to generate revenues of €5 billion and EBIT of at least €600 million (12 per cent of sales) by 2025.

KERING SA (EPA: KER)

Kering, the French multinational corporation specialising in luxury goods, reported its first half performance of FY23 inclusive of second quarter performance. While the Q2 FY23 sales grew 2 per cent on reported and 3 per cent on comparable basis, the group’s revenue amounted to €10.1 billion in the first half of FY2023—increasing 2 per cent both in reported as well as comparable terms. The directly-operated retail network sales including sales from e-commerce sites, rose 4 per cent on comparable basis during the quarter, with good performances in Asia-Pacific and Japan. While western Europe’s growth was solid, the sales in North America fell.

On half-yearly basis, recurring operating income amounted to €2.7 billion—27 per cent of sales, and the net income attributable to the group was €1.8 billion. Free cash flow excluding real-estate acquisition and disposal, remained high at €2.1 billion, 4 per cent up. Comparable profitability figures of last year were not reported.

LVMH MOËT HENNESSY LOUIS VUITTON (EPA: MC)

The Paris-headquartered LVMH Moët Hennessy Louis Vuitton—one of the world’s leading luxury brands—reported first half revenue of €42.2 billion, registering 15 per cent growth while organic revenue growth remained 17 per cent compared to the first half of 2022. During the reported period all business groups achieved double-digit organic revenue growth except for wine & spirits. The second quarter’s organic revenue growth remained 17 per cent, in line with trends seen in the first quarter. Profit from recurring operations for the first half of 2023 was up 13 per cent at €11,574 million. Operating margin reached 27.4 per cent of revenue. Group share of net profit was up 30 per cent at €8 481 million. Operating free cash flow halved due to major investments in exceptional real estate and in operational inventories, notably in high jewellery.

Fibre2Fashion News Desk (WE SB)