Interviews
AREZZO & CO (B3: ARZZ3)
Brazilian Arezzo & Co announced the first quarter (Q1) fiscal 2023 (FY23) results at the beginning of May. The Sao Paulo-based fashion house of brands reached record-setting first quarter sales of R$1.3 billion, up 23.4 per cent compared to the same quarter last year. The recurring EBITDA of R$164 million—an increase of 22.8 per cent—reflected a 16 per cent margin. All of the company’s brands posted growth in the quarter: in particular, The Vans brand and AR&CO grew 48.8 per cent and 44.1 per cent, respectively. The physical stores’ channel, which includes both franchise and owned stores, recorded R$681 million in sales for the period—marking a 19.6 per cent growth compared to Q1 FY22.
The company posted a gross income of R$536 million, also increasing by 19.6 per cent on a year-over-year basis, yet the gross margin rate of 52.4 per cent decreased by 110 basis points compared to Q1 FY22. The increase of the sell-out channels had positive, while decrease of gross margin of the international operation had negative impact on the gross margin. The company’s CAPEX investment of R$51 million grew almost 25 per cent.
BURBERRY GROUP PLC (LON: BRBY)
British Burberry Group released its preliminary results for 52 weeks ended April 1, 2023, in May and reported a 5 per cent increment in FY23 revenue (10 per cent on reported basis), wherein, comparable store sales grew 7 per cent over the prior year. Adjusted operating profit increased by 8 per cent (19 per cent margin) on constant currency basis and 21 per cent (20.5 per cent margin) on reported basis, net operating profit margin being 21.2 per cent. The fourth quarter comparable store sales increased by 16 per cent as growth rebound in mainland China (+13 per cent), EMEIA (+27 per cent), and Asia-Pacific (+19 per cent), while Americas remained down 7 per cent. The reported period was marked by refurbishment/opening of 60 stores; reorganised supply chain, merchandising and digital operations under new leaders; an agreement to acquire a business from an Italian supplier to strengthen technical outerwear capability; and a strong cash conversion at 87 per cent with proposed dividend increasing by 30 per cent.
The company has decided to maintain its FY24 and medium-term targets, staying mindful of macroeconomic and geopolitical environment.
MARKS AND SPENCER GROUP PLC (LON: MKS)
Another British company, Marks and Spencer Group Plc, reported full year results for 52 weeks ended April 1, 2023, announcing PAT of £364.5 million registering an increase of 18 per cent. The Group’s revenues increased by 9.6 per cent (11.2 per cent in international constant currency) from £10,885.1 million in FY22 to £11,931.3 million in FY23. Clothing and home sales were up 11.5 per cent to £3.72 billion: store sales rose 14.9 per cent and online sales grew 4.8 per cent driven by strong growth in click and collect. The segment’s adjusted operating profit was £323.8 million, including £35.2 million rates relief, against £330.7 million in the last fiscal.
M&S food and clothing and home businesses invested in value to protect customers from the full force of inflation during the year. While the food outperformed the market, clothing and home retained market-leading value perception and its style credentials continued to improve. The store rotation and renewal programme delivered strong sales uplifts and will continue to accelerate in this year too, marked by opening of five brand defining full-line stores in major cities. The group will move ahead with disciplined approach to capital allocation, while further reducing net debt and maintaining investment grade credit metrics. It also plans to resume dividend payments at its interim results.
GOLDWIN INC (TYO: 8111)
Japan’s The Goldwin Group achieved an early recovery from the COVID-19 pandemic and surpassed ¥100,000 million in consolidated net sales in FY23, reaching a record high of ¥115,052 million—an increase of 17.1 per cent over the previous year. As scheduled, the Group’s SG&A expenses rose by ¥1.4 billion from the previous year due to the establishment of a new distribution centre in Kanto with updates to the core system. The capital investment in the distribution centre was changed to lease agreement. The timing of the core system update is now postponed to April 2024, thereby resulting in an increase of only ¥700 million (from prior year) in infrastructure and growth investment expenses for the current fiscal. The operating and ‘ordinary’ profits were reported as ¥21,904 million (up 32.7 per cent) and ¥28,083 million (up 38.4 per cent), respectively.
For FY24, the Group anticipates net sales of ¥123,000 million, operating profit of ¥22,600 million and ordinary profit of ¥28,200 million. Since the company exceeded the profit targets this fiscal, only the second year of the Medium-term Management Plan, it has decided to revise its targets upward for the final year i.e., the year ending March 31, 2026, from ¥125,000 million to ¥149,000 million for net sales, from ¥21,000 million to ¥26,800 million for operating profit and from ¥22,500 million to ¥33,400 million for ordinary profit.
GUNZE LTD (TYO: 3002)
Gunze Ltd, another Japanese company with diversified businesses that include apparel, threads, and accessories, engineered plastics, medical materials, electronic components, mechatronics, real estate, energy, and landscaping, reported its FY23 (officially termed FY22 ended March 31, 2023) performance with net sales of ¥136,030 million (+9.4 per cent), operating profit of ¥5,812 million (+19.1 per cent), and ordinary profit of ¥6,021 million (+11.5 per cent).
The company’s apparel business, impacted by rising raw material cost and exchange rate fluctuations, experienced a downward pressure on profits forcing the company to revise its prices. As a result, the apparel business recorded net sales of ¥60,986 million (+6.6 per cent) and operating loss of ¥222 million (¥557 million for the previous fiscal year).
DICKSON CONCEPTS (I) LTD (HKG: 0113)
Hong Kong-based Dickson Concepts International Ltd is engaged in the principal activities of sale of luxury goods and securities investment. The former involves sale of luxury goods to retail and wholesale customers and net income from concession and consignment sales.
Reporting its full financial year ended March 31, 2023, the Group achieved a turnover of HK$2,138 million, increasing 5.5 per cent. Geographically, Hong Kong contributed close to 70 per cent of sales with the rest coming from Taiwan and other territories in Asia. The fashion and accessories category contributed 25.2 per cent of the sales and securities trading only 3.1 per cent.
Net profit for FY23 was HK$252.6 million against HK$200.9 million in prior year, a 25.7 per cent growth, as a result of the increase in the Group’s sales turnover and strict control of margins and costs at all levels of the operations. However, the Group chose to remain conservative in expanding store network during the year with total stores count limiting to 62 stores—7 in HK, 29 in China and 26 in Taiwan.
Going ahead, the Group expects the retail environment in HK to remain challenging, with downturn in the stock and property markets combined with inflation and increasing interest rates that may have negative impact on consumer spending. The Group will continue with its conservative store network and investment portfolio despite ending FY23 with a net cash of HK$2,262.3 million and a strong balance sheet.
BOOT BARN HOLDINGS (NYSE: BOOT)
Boot Barn Holdings, Inc ended its full financial year on April 1, 2023, and announced its financial performance last month. For the last quarter, on YoY comparison, the net sales increased by 11 per cent to $425.7 million, with same stores sales decreasing by 5.5 per cent. On a full year basis, net sales increased by 11.4 per cent to $1.6 billion against 66.6 per cent net sales growth in the previous year (53 weeks ended March 26, 2022). On an annual basis, same store sales decreased by 0.1 per cent. The net income was $170.6 million or $5.62 per diluted share compared to $192.5 million or $6.33 per diluted share in FY22.
The company operates as a lifestyle retailer of western and work-related footwear, apparel and accessories, and opened 12 new stores during the reported quarter and overall 45 through the year, bringing total store count to 345 at FY closure.
V-MART RETAIL (NSE: VMART)
India’s V-Mart Retail is among the pioneers in organised value fashion retail in the country. Founded two decades ago, the NSE-listed company is the omni retail store chain for the complete family that offers fashion apparel, footwear, home furnishings, general merchandise, and grocery.
For Q4, the company reported a revenue of ₹594 crore (+29 per cent), EBITDA and PAT stood at ₹23 crore and negative ₹37 crore respectively. While its same store sales for the quarter increased by 10 per cent YoY, the full year SSSG was 23 per cent. On full fiscal basis, the annual revenues and EBITDA stood at ₹2,465 crore (+48 per cent) and ₹269 crore, respectively. However, PAT registered a loss of ₹8 crore. Excluding the ₹44 crore loss contributed from the newly acquired online business unit, the yearly EBITDA increased by 53 per cent.
Since the acquisition of Unlimited stores in south India, V-Mart has been able to integrate the business seamlessly and bring the operations to profitable growth, with the unit contributing ₹438 crore in revenues for the full year. V-Mart’s recent strategic acquisition of LimeRoad, an online fashion marketplace, to bolster its omni vision also proved to be a promising move with the platform net sales increasing by 88 per cent post-acquisition. It has also been successful in achieving a significantly higher customer conversion rate for V-Mart products listed on the LimeRoad platform when compared to any other marketplace and paving the path for more synergetic omni operations in the future. On retail expansion front, the company opened 17 new stores in Q4 and a total of 59 during the year, taking the tally to 423 stores.
MACY’S INC (NYSE: M)
New York-based Macy’s, Inc, having iconic retail brands like Macy’s, Bloomingdale’s and Bluemercury, reported its first quarter (ended April 2023) results on June 1, updating its annual guidance alongside. Compared to the same quarter last year, the net sales of $5 billion registered a 7 per cent loss, inclusive of 8 per cent and 7 per cent respective losses in digital and brick-and-mortar sales. Even comparable sales were down 7.9 per cent on owned-basis and 7.2 per cent on owned-plus-licensed basis. While Macy’s comparable sales were down 8.7 per cent on owned basis (7.9 per cent on owned-plus-licensed basis), Bloomindale dipped 3.9 per cent (4.3 per cent on owned-plus-licensed basis). Only Bluemercury upheld some reputation on owned basis by rising 4.3 per cent. Gross margin rate for the reported quarter was 40 per cent gaining from 39.6 per cent during Q1, FY22, still a value loss of $23 million, from $2,117 million last year to $1,994 million in 2023. Compared to Q1 FY19, the increase was 180 basis points from 38.2 per cent.
The quarter’s performance induced a cautious approach to the remaining year: the earlier net sales guidance of $23.7 - $24.2 billion is now revised to $22.8 - 23.2 billion and adjusted diluted EPS from $3.67 - $4.11 to $2.70 - $3.20. The updated guidance assumes macro pressures on the consumer to worsen, as well as macro pressures experienced in mid-March through April to persist. Additionally, it incorporates the second quarter markdown actions the company is taking to clear out spring transitional and early summer categories to support clean end-of-quarter inventories as well as higher annual shortage rate than previously anticipated. The guidance also includes the benefit of an incremental $200 million of cost savings identified as part of ongoing expense management that is expected to impact both gross margin and SG&A expense.
Fibre2Fashion News Desk (WE - SB)
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
