STRONG – Growth in both sales and profitability
FIRST QUARTER
H&M Group | (STO: HM-B)
For its first quarter dated December 1, 2022 to February 28, 2023, Swedish H&M Group reported net sales increase of 12 per cent at SEK 54,872 million, increasing 3 per cent in local currency. Excluding Russia, Belarus and Ukraine, the increase was 16 per cent in SEK and 7 per cent in local currencies. During the reported period, the sales for portfolio brands increased 19 per cent in SEK and 11 per cent in local currencies. Sellpy, one of Europe’s largest second-hand platforms and previously an associated company, has been consolidated into the Group from the first quarter.
On comparing with first quarter performance of 2022, while the gross margin rate remained 47.2 per cent of sales against earlier rate of 49.3 per cent, the operating profit grew to SEK 725 million against 458 million; and, the income after tax reached SEK 540 million vs SEK 217 million, corresponding to SEK 0.33 per share against SEK 0.13. The lower gross margin rate was caused by the negative external factors for purchases made for the first quarter. The stock-in-trade decreased 16 per cent in adjusted currency terms.
For its first quarter ending February 28, 2023, Swedish H&M Group reported net sales increase of 12 per cent. On consolidated basis,
Adastria Co., Ltd reported its entire year net sales at ¥242,552 million, growing 20.3 per cent.
San Francisco-based Levis Strauss & Co. reported its first quarter 2023 results with net revenues up 6 per cent to $1.78 billion.
FULL YEAR
Arezzo | (BVMF: ARZZ3)
In its March 9, 2023 release, Brazil’s largest fashion house of brands reported its Q4 and FY22 results. The full year was marked by the strongest result in the company’s history with gross revenue R$ 5.2 billion (+43.1 per cent compared to last fiscal), gross margin of 53.9 per cent and adjusted EBITDA of R$657 million, also up 43.1 per cent.
For the last quarter, the gross revenue was R$ 265 million – 20 per cent up, over same quarter last financial year; 53.8 per cent gross margin (flat to Q4, previous fiscal); and, R$ 191 million adjusted EBITDA (up 3 per cent), contributing 14.6 per cent of sales.
Advancing in 2023, Arezzo & Co is strategically prioritising: sustainable growth and continuous innovation of core brands; diligent expansion of the brands portfolio, expanding its addressable market; continuous expansion of AR&CO and its sub-labels, some at an advanced stage such as Reserva and Reserva Go, and others at embryonic stage; expansion of women’s apparel within the Group’s portfolio through investments in the existing brands – Carol Bassi, Schutz and Reversa; and, start of a new path of growth, joining Arezzo & Co’s know-how in footwear business management, product development, OMNI sales, to emerging international brands in full growth.
Adastria | (TYO: 2685)
Headquartered in Japan, Adastria Co., Ltd plans, produces and retails clothes and sundry goods in over 1,400 stores spread across Japan, China, Taiwan, Hong Kong and Korea. The Tokyo stock exchange-listed company ended its financial year on February 28, 2023, and announced results for the same on April 4, 2023. On consolidated basis, the entire year net sales were reported at ¥242,552 million, growing 20.3 per cent compared to 9.6 per cent growth in the previous fiscal. Operating profit grew 75.4 per cent to ¥11,515 million, whereas net income of ¥7,540 million registered a 53.3 per cent rise. On comparable basis, net income per share in closing fiscal was ¥166.37 against ¥108.72 in the prior year.
The result is attributed to revival of Japan market to normal consumer activity though the economic outlook continues to remain uncertain because of the yen’s rapid depreciation, the rising cost of resources and energy, and worldwide inflation due to Ukraine crisis.
MODERATE – Growth in either sales or profitability
FIRST QUARTER
Levis | (NYSE: LEVI)
In April beginning, San Francisco-based Levis Strauss & Co. reported its first quarter 2023 results with net revenues increasing 6 per cent to $1.78 billion. In constant currency, the increase was 9 per cent compared to Q1, 2022. The revenue growth was driven by DTC and international business. Comprising 42 per cent of the quarter’s total revenue, DTC channel was up by 12 per cent on quarter-to-quarter basis. Wholesale net revenues increased 2 per cent on a reported basis, driven by strong growth in Asia and Canada, as well as growth in the US.
The quarter’s gross margin of 55.8 per cent was 360 basis points below the record level of 59.4 per cent in Q1, 2022. With operating margin of 9.3 per cent (14.2 per cent in Q1, 2022), adjusted net income for the quarter dropped to $135 million from $189 million in Q1, 2022.
The guidance for 2023 includes net revenues between $6.3 billion and $6.4 billion, reflecting reported revenue growth of 1.5 per cent to 3 per cent y-o-y, and adjusted diluted EPS of $1.3 – $1.4 with the assumption that no significant worsening of COVID-19 pandemic, inflationary pressures, supply chain disruptions or further worsening currency impacts will be there.
FULL YEAR
Onward Holdings | (TYO: 8016)
Another company from Japan, Onward Holdings, is primarily into the management of Group subsidiaries and affiliates engaged in the apparel and lifestyle business as well as related business activities. In its full year result, the company reported revenues of ¥176,072 million, growing 4.5 per cent over the previous fiscal. However, the comprehensive income reduced from ¥11,657 million a year prior to ¥10,767 million – a drop of 7.6 per cent despite a robust 165 per cent growth in EBITDA.
Though contrasting, both Adastria’s strong and Onward’s moderate performances are characterised by a common factor – growing revenues.
Tesco Plc | (LON: TSCO)
The UK’s Tesco Plc announced its preliminary full year (FY23) result on April 13, 2023. The Group’s VAT excluding revenue, including fuel at £65,762 million registered a 7.2 per cent increase over revenue of previous year. Excluding fuel, the revenue of £57,656 million was up 5.3 per cent, both in actual and constant exchange rates, compared to £54,768 million in 2022. However, the operating profit dipped 40.4 per cent from £2,560 million in last fiscal to £1,525 million in 2023; Profit before tax plunging even lower at 50.8 per cent from £2,033 million to £1,000 million. While the retail cash generation from operating activities grew 3.8 per cent, on comparable basis, the diluted EPS posed a gloomy picture from 19.64p in 2022 to 10.08p in 2023 – a drop of 48.7 per cent. The Group’s strong sales performance was helped by Retail LFL (Like for Like) sales (+5.1 per cent), as volumes held up relatively well despite cost-of-living pressures and some further post-pandemic normalisation. Central Europe LFL sales growth, in particular, was encouraging at 10.4 per cent.
In its outlook, the Group expects to deliver a broadly flat level of retail adjusted operating profit in 2023-24 and retail cash flow within the targeted range of £1.4 to £1.8 billion, while the adjusted operating profit in ‘Bank’ to be between £130 – £160 million. Tesco will continue to prioritise investment in its customer offer.
Fibre2Fashion News Desk (WE – SB)
