Global fashion retailers deliver mixed performance in FY23

Weak: No Growth in Either Sales or Profits

Duluth Holdings Inc (NASDAQ: DLTH)

NASDAQ-listed Duluth Holdings' financial results for FY23, which ended on January 28, 2024, were announced on March 7, 2024. Based in Mount Horeb, Wisconsin, Duluth is a lifestyle brand of men's and women's workwear, casual wear, outdoor apparel, and accessories.

The company's fourth quarter (Q4) delivered sales of $245.6 million compared to $241.8 million in Q4 FY22, with sales of women's business growing 12 per cent. Net income of $7 million resulted in diluted EPS of $0.21, while adjusted EBITDA increased to $21.1 million compared to $20.6 million in the last quarter of the previous fiscal.

On a full-year basis, net sales declined from $653.3 million in the prior year to $646.7 million in 2023, yielding a net loss of $9.4 million and a diluted EPS of -$0.28. The adjusted EBITDA of $33.4 million reflected 5.2 per cent of net sales; a healthy inventory composition with 90 per cent in current products and a 30 per cent decrease in clearance items were other reported figures.

In its 2024 outlook, the company is looking at net sales in the range of $640-$660 million, adjusted EBITDA in the range of $39-$45 million to beget negative EPS in the range of -$0.22 to -$0.07, and capex, inclusive of software hosting implementation costs, of approximately $25 million.

Nordstrom (NYSE: JWN)

Nordstrom reported its Q4 and FY23 financial performance, which ended on February 3, 2024, on March 5, 2024. The company's fourth-quarter sales increased by 2.2 per cent—from $4,200 million as of January 28, 2023, to $4,293 million as of February 3, 2024—and EBIT increased from $187 million last year to $215 million in 2023.

For the full fiscal 2023, net sales were $14,219 million compared to $15,092 million in fiscal 2022, and net earnings for both the fourth quarter and the full year were reported at $134 million (as posted on the company's website).

In the fourth quarter, active, beauty, and women's apparel delivered the strongest growth compared to 2022, while the active and beauty categories had the strongest growth on a full-year comparison. The company opened or relocated 20 stores during the year and ended the fiscal with a total store count of 359.

On February 28, 2024, the board of directors declared a quarterly cash dividend of $0.19 per share, to be paid to shareholders of record at the close of business on March 12, 2024, payable on March 27, 2024.

Since the 53^rd week in FY2023 creates a timing shift in the 4-5-4 calendar for FY2024, the company's outlook for FY2024 expects a revenue range, including retail sales and credit card revenues, of 2 per cent to a 1 per cent decline to 1 per cent growth against 53^rd week FY2023. The comparable sales range is a 1 per cent decline to 2 per cent growth versus 52 weeks in FY2023, with an EBIT margin expected to stay between 3.5 and 4 per cent of sales.

Started as a shoe store in 1901, today Nordstrom operates more than 350 Nordstrom stores as well as Nordstrom Local and Nordstrom Rack locations, along with a digital presence through Nordstrom and Rack apps and websites.

Strong: Growth in Both Sales and Profits

OVS S.p.A. (BIT: OVS)

Mestre, Venice-based OVS S.p.A.'s fiscal 2023 began on February 1, 2023, and ended on January 31, 2024—the day the period's performance was reported through a press release. The certified annual data will be reported following the meeting of the board of directors scheduled for April 17, 2024.

The company found 2023 to have extremely unfavourable climatic conditions, which penalised the apparel market at the beginning of both seasons. Despite this, sales for the entire year were up by approximately 1.4 per cent, an increase that occurred mainly in the like-for-like perimeter. The second half of the year, contrary to general concerns about the consumption trend and in addition to an anomalous persistence of summer temperatures, recorded stable turnover with growth in the last (fourth) quarter. While outperforming the market, the Group reached a market share of 9.6 per cent (versus 8.1 per cent in 2019). Thanks to the robust recovery of profitability in the fourth quarter of 2023, the adjusted EBITDA for the year is expected to mark a slight improvement from the €180.2 million or approximately $195.36 million of 2022.

The adjusted net financial position on January 31, 2024, was reported as improving compared to €162.0 million or approximately $175.63 million on January 31, 2023, after the distribution of dividends of €16.4 million and share buybacks of €31.4 million.

Ross Stores Inc (NASDAQ: ROST)

An S&P 500, Fortune 500, and NASDAQ 100 company, Ross Stores Inc, operates Ross Dress for Less (Ross)—the largest off-price apparel and home fashion chain in the US. The Dublin (California)-headquartered company's chain comprises 1,764 locations in 43 states, the District of Columbia, and Guam.

In its financial performance released on March 5, 2024, the company's fourth-quarter sales were reported at $6.02 billion ($5.2 billion in Q4, 2023) and net earnings at $609 million ($447 million in Q4, 2023).

On a full-year basis, FY23 sales were $20.37 billion, and net earnings were $1.87 billion versus $18.7 billion and $1.5 billion, respectively, in the previous fiscal. The reported EPS for the 53 weeks ended February 3, 2024, grew to $5.56, up from $4.38 in the 52-week fiscal 2022 ended January 28, 2023. Comparable stores' sales for the 52 weeks ended January 27, 2024, grew by 5 per cent. Both sales results—quarterly and full fiscal—included a $308 million benefit from the 53^rd week.

In its fiscal 2024 guidance ending February 1, 2025, the company expects same-store sales to grow by 2 to 3 per cent and EPS to range between $5.64 and $5.89.

American Eagle Outfitters (NYSE: AEO)

NYSE-listed American Eagle Outfitters, Inc (AEO) reported its fourth quarter and full year performance for the period ended on February 3, 2024, on March 7, 2024. The company, headquartered in Pittsburgh, compared these results with the comparable period of the previous year, which ended on January 28, 2023.

In Q4, FY23, net sales increased by 12 per cent to $1.7 billion, with store revenue up by 10 per cent and digital revenue growing by 19 per cent.

For the full year, there was a 5 per cent growth in total net revenue to $5.3 billion, with the 53^rd week contributing $57 million or approximately one point to revenue growth for the year. On an annual basis, both total store and digital revenues rose by 6 per cent each. GAAP operating income was $223 million, and adjusted operating income was $375 million (7.1 per cent of sales), which expanded by 170 basis points from the previous year.

AEO is a global specialty retailer that offers high-quality, on-trend clothing, accessories, and personal care products at affordable prices under its American Eagle and Aerie brands. In a separate release on the same day, the company announced its new Powering Profitable Growth long-term strategy, which aims to deliver $5.7 to $6 billion in revenue and an approximately 10 per cent operating margin by the end of FY2026. This strategy targets a CAGR of mid-to-high teens for operating income and 3 to 5 per cent growth in revenue.

For the FY2024 outlook, management expects operating income of $445 to $465 million, reflecting 2 to 4 per cent revenue growth. This includes an approximately one-point headwind from one less selling week due to the retail calendar shift, resulting in expected revenue and profit growth to be skewed towards the first half of the year.

For Q1, FY24, operating income is expected to be in the range of $65 to $70 million.

Burlington Coat (NYSE: BURL)

NYSE-listed Burlington, an off-price retailer of branded apparel, footwear, accessories, and merchandise for the home at everyday low prices, announced its results on March 7, 2024, for the 14 weeks and 53 weeks ended February 3, 2024. For comparison, results for the 13 weeks and 52 weeks ended January 27, 2024, were also provided.

During the fourth quarter, total sales increased by 14 per cent on a 14-week basis compared to the 13-week period last year, reaching $3,121 million. On a 13-week basis, sales increased by 9 per cent to $2,983 million. Net income was $227 million on a 14-week basis compared to $185 million on a 13-week basis.

On a 53-week full-year basis, total sales increased by 12 per cent compared to the 52-week period of the previous year, with net income increasing by 48 per cent to $340 million, resulting in an EPS of $5.23 (compared to $3.49 last year). On a 52-week full-year basis, total sales increased by 10 per cent, adjusted EBIT increased by 39 per cent, and adjusted net income increased by 44 per cent.

For the fiscal 2024 outlook, based on the 52 weeks ending February 1, 2025, Burlington expects total sales to increase in the range of 9 to 11 per cent on top of the 10 per cent increase for the 52 weeks ended January 27, 2024. Additionally, the company anticipates an adjusted EBIT margin increase in the range of 10 to 50 basis points compared to the 52 weeks ended January 27, 2024.

For Q1 FY24 (the 13 weeks ending May 4, 2024), Burlington expects the adjusted EBIT margin to increase in the range of 20 to 60 basis points and comparable store sales to increase by 0 to 2 per cent, on top of the 4 per cent increase during Q1 FY23.

LPP Spolka Akcyjna (WSE: LPP)

LPP (SA), a Polish family business and one of the fastest-growing clothing companies in Central Europe, concluded its FY23 on January 31, 2024, and announced its financial results on March 27, 2024. In the fourth quarter of 2023, the company witnessed a 15.7 per cent year-on-year increase in revenue, led by the strong growth of the Sinsay brand, which accounted for a 40 per cent share of the annual revenue. Additionally, favourable exchange rates helped the company achieve a margin of 52.5 per cent—an increase of nearly 3 percentage points—while net profit soared by over 160 per cent.

In 2023, LPP observed a nearly 16 per cent year-on-year increase in sales within its stationary network, despite a slight decrease in e-commerce revenue. Operating profit surged by 93 per cent to reach the highest level in the company's history at PLN 2.3 billion (approximately $576 million). The gross margin also increased to 51.5 per cent, up by 1.2 percentage points. A 2 per cent year-on-year decrease in selling, general, and administrative (SG&A) costs, mainly due to the optimisation of energy consumption and external service costs, alongside reduced debt and increased cash from operating activities to PLN 1.1 billion (approximately $275 million), contributed to this success. Consequently, net profit from continuing operations in 2023 rose by 85.5 per cent to a record PLN 1.6 billion (approximately $401 million).

LPP manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay, and operates in nearly 40 markets worldwide through a network of over 2,200 stores, occupying nearly 2 million m² of total retail area.

For 2024, LPP plans to allocate a record PLN 1.5 billion (approximately $376 million) for investments, including PLN 1.2 billion (approximately $300 million) for the development of its store network. The company has also earmarked PLN 200 million for logistics this year and PLN 250 million for the following year. With strategies focusing on attractive collections, expanding retail space, and developing omnichannel sales, LPP aims to achieve PLN 21 billion (approximately $586 million) in revenue this year. This goal includes positive offline growth and double-digit year-on-year e-commerce growth while maintaining cost efficiency and margins between 52 and 53 per cent.

Fibre2Fashion News Desk (WE - SB)