Luxury giants report mixed performance in FY23

STRONG – GROWTH IN SALES & PROFITS

Hermes (EPA: RMS)

French luxury group Hermes reported full fiscal 2023 results, inclusive of Q4, on February 9, 2024. In the fourth quarter, the group's sales reached €3,364 million, up by 18 per cent at constant exchange rates and 13 per cent at current exchange rates, despite the particularly high comparison base in America and Asia. Driven by sustained sales, the group continued the trend seen in the third quarter.

On a full-year basis, consolidated revenue amounted to €13,427 million, increasing by 21 per cent at constant exchange rates and 16 per cent at current exchange rates compared to 2022. All geographical markets posted solid performances with homogeneous growth of around 20 per cent. Sales increased both in the group’s stores (+20 per cent), benefitting from strong demand and the reinforcement of the exclusive distribution network, and in wholesale activities (+24 per cent), driven by the travel retail business. All the métiers (business activities) confirmed their solid momentum, with ready-to-wear (RTW) and accessories, watches, and other Hermès businesses achieving remarkable increases. The RTW and accessories business, increasing by 28 per cent, continued its strong growth, thanks to the success of the RTW and footwear collections. The silk and textiles sector recorded a solid performance with 16 per cent annual growth.

Recurring operating income amounted to €5,650 million (42.1 per cent of sales), registering an increase of 20 per cent compared to €4,697 million in 2022. The net profit of the group reached €4,311 million (32.1 per cent of sales) – an increase of 28 per cent, resulting from outstanding operating performance as well as improved return on cash management.

After distribution of the ordinary dividend valued at €1,359 million, and inclusion of financial investments of €316 million and treasury share buybacks of €132 million for 74,954 shares outside the liquidity contract, the restated net cash position increased by €1,422 million to €11,164 million compared to €9,742 million as of December 31, 2022. A positive outlook for 2024 is on the cards, but no projections were reported.

Hugo Boss AG (ETR: BOSS)

The German luxury group ended 2023 on a high note, making it a record year for Hugo Boss. The group delivered double-digit top-line growth (+18 per cent currency-adjusted) as well as bottom-line growth (+22 per cent increase in EBIT) on a preliminary basis. The quarter’s result was built on the performance of the first nine months. Continuing its growth trajectory across both brands, all regions, and channels, the sales performance was fuelled by the successful execution of several marketing, product, and distribution initiatives as part of the company’s ‘CLAIM 5’ growth strategy.

On a preliminary basis, the currency-adjusted revenues in Q4, 2023 grew by 13 per cent compared to the prior-year period. In reporting currency, sales increased by 10 per cent year-on-year to €1,177 million (Q4 2022: €1,068 million), making the final quarter of 2023 the most successful one in the company’s history. The quarter’s robust performance helped Hugo Boss achieve its full-fiscal sales and earnings targets, which were raised twice during the year. Annual sales reached €4,197 million against €3,651 million in 2022.

On a preliminary basis, the company further expects operating profit (EBIT) to increase by 22 per cent to €410 million for the full year 2023 (2022: €335 million), fully aligning with the company’s recent guidance range, i.e. an increase between 20 per cent and 25 per cent to €400 million to €420 million. Thus, FY2023 marked an important milestone for the company towards achieving its 2025 financial ambition of generating revenues of €5 billion and an EBIT of at least €600 million (12 per cent of sales), which the company raised in mid-2023.

Hugo Boss will publish its final results for 2023 and its financial outlook for fiscal 2024 on March 7, 2024.

LVMH Moet Hennessy Louis Vuitton (EPA: MC)

LVMH Moet Hennessy Louis Vuitton—one of the world’s leading luxury goods groups—recorded revenue of €86.2 billion in 2023, as reported on January 25. This revenue translates into organic year-on-year growth of 13 per cent compared to 2022 (€79.18 billion). Except for Wines & Spirits, all business segments reported strong organic revenue growth, with Europe, Japan, and the Rest of Asia achieving double-digit organic growth. The respective rises in revenues for Fashion & Leather goods, Perfumes & Cosmetics, Watches & Jewellery, and Selective Retailing were 14 per cent, 11 per cent, 7 per cent, and 25 per cent.

The profit from recurring operations stood at €22.8 billion during the reported fiscal, up 8 per cent. The current operating margin remained stable compared to 2022, with the group's share of net profit amounting to €15.2 billion, also up 8 per cent.

At the Shareholders’ Meeting on April 18, 2024, LVMH will propose a dividend of €13 per share. An interim dividend of €5.50 per share was paid on December 6, 2023, while the final dividend of €7.50 per share will be paid on April 25, 2024.

In the fourth quarter, the overall organic revenue growth came to 10 per cent, inclusive of 4 per cent growth in Wines & Spirits, 9 per cent in Fashion & Leather goods, 10 per cent in Perfumes & Cosmetics, 3 per cent in Watches & Jewellery, and 21 per cent in Selective Retailing.

WEAK – NO GROWTH IN SALES & PROFITS

Kering SA (EPA: KER)

Kering, the French multinational corporation specialising in luxury goods, reported its full-year performance for FY23 inclusive of fourth-quarter results on February 8, 2024. The full-year revenue amounted to €19.6 billion—a decrease of 4 per cent on a reported basis, including a 4 per cent negative impact from changes in exchange rates and a 2 per cent positive impact due to the scope of consolidation. On a comparable basis, the revenue was down 2 per cent. The sales from the directly operated retail network, including e-commerce, were stable, while the revenues from wholesale and others fell 11 per cent. Revenues across all Houses (brands) declined: Gucci achieved sales of €9.9 billion (6 per cent down as reported and 2 per cent down on a comparable basis), Yves Saint Laurent’s sales were €3.2 billion (down 4 per cent as reported and 1 per cent on a comparable basis), Bottega Veneta's revenue totalled €1.6 billion (down 5 per cent as reported and 2 per cent on a comparable basis); and revenues from Other Houses amounted to €3.5 billion (down 9 per cent as reported and 8 per cent on a comparable basis).

The year’s recurring operating income totalled €4.7 billion, dropping 15 per cent from the 2022 level. The recurring operating margin also fell from 27.5 per cent in 2022 to 24.3 per cent in 2023. Free cash flow from operations was €2.0 billion, and excluding real estate acquisitions and disposals, free cash flow from operations was €3.3 billion.

On a quarterly basis, the Q4 revenue was down 6 per cent as reported and 4 per cent on a comparable basis, inclusive of sales from the directly operated retail network dropping 2 per cent on a comparable basis. Revenue grew in Asia-Pacific and Japan, and trends in Western Europe and North America also improved sequentially.

An interim dividend of €4.50 per share was paid on January 17, 2024. If approved, a final dividend of €9.50 will be paid on May 6, 2024, on positions determined on the evening of May 3, 2024.

In 2024, in the context of the ongoing normalisation of the sector’s growth, the impact of Kering’s investment strategy is expected to weigh on the group’s full-year recurring operating income, which should post a decline compared to the level reported in 2023, particularly in the first half of the year.

Fibre2Fashion News Desk (WE - SB)