STRONG: GROWTH IN SALES & PROFITS
RALPH LAUREN (NYSE: RL)
ABFRL reported a 26 per cent y-o-y consolidated revenue growth in Q4 at ₹2,880 crore and full fiscal ending March 31 revenue of ₹12,418 crore.
American Eagle Outfitters delivered total net revenue of $1.1 billion in the first quarter of FY23 ended April 29, 2023.
Canada Goose’s quarter revenue grew 31.4 per cent with strong growth from Asia-Pacific and EMEA.
On May 25, 2023 Ralph Lauren reported fourth quarter and full year 2023 results, and provided initial outlook for 2024. The reported results, led by Asia and Europe, were ahead of expectations.
The fourth quarter revenue was up 1 per cent on reported and 9 per cent on constant currency basis, with full fiscal registering respective growths of 4 per cent and 10 per cent. Global D2C store sales grew 6 per cent on comparable basis during the reported quarter, driven by continued brand elevation with double-digit growth in average unit retail (AUR) and full-price retail performance. The quarter’s gross profit was reported at $951 million (61.7 per cent of sales) – 63 per cent on adjusted basis in constant currency terms; operating income at $40 million (operating margin was 2.6 per cent) on reported basis including restructuring-related and other net charges of $35 million; and, adjusted operating income at $98 million (6.1 per cent in constant currency). The results exceeded expectations despite significant cost and foreign currency headwinds.
On full fiscal basis, revenue increased 4 per cent to $6.4 billion – North America increasing 2 per cent, Europe 3 per cent, and Asia growing 11 per cent to $1.4 billion. On reported basis, gross margin was $4.2 billion (64.6 per cent), operating expenses and operating income were $3.5 billion (~9 per cent up) and $704 million, respectively. Adjusted operating income of $935 million was 13.7 per cent in constant currency – 60 basis points above the prior year. For the fiscal, diluted EPS on reported and adjusted basis dwindled from $8.07 and $8.38 in fiscal 2022 to $7.58 and $8.34, respectively.
Outlook for fiscal 2024 underlined the net revenue growth of low-single digits on both the reported and constant basis, with operating margin to expand 30 to 50 basis points in constant currency. Based on current exchange rates, foreign currency is expected to benefit revenue growth by approximately 20 basis points. For FY24, the New York-based company is planning capital expenditure of ~$275 million to $300 million.
ABFRL (NSE: ABFRL)
Ending its last quarter and FY23 on March 31, 2023 Indian fashion company ABFRL reported a 26 per cent y-o-y consolidated revenue growth in Q4 at ₹2,880 crore and full fiscal revenue of ₹12,418 crore, growing 53 per cent annually and 41 per cent over pre-COVID. Though EBITDA for the quarter declined 42 per cent, it grew 34 per cent for full fiscal from ₹1,203 crore in FY22 to ₹1,617 crore in FY23. The quarterly growth in revenue was propelled by robust retail like-to-like sales across businesses, accelerated omnichannel play and network expansion as the company added 500+ stores in the last one year. The net profit in the last quarter was impacted by negative operating leverage on the back of sluggish sales, the company’s continued investments in TMRW and the marketing expenses being ~1.5x of last year.
ABFRL, a part of a leading Indian conglomerate – The Aditya Birla Group, occupies 10.8 million sq ft of retail space and is India’s first billion dollar pure-play fashion powerhouse with an elegant bouquet of fashion brands and retail formats. The company has a network of 3,977 stores across approximately 33,535 multi-brand outlets with 6,723 point of sales in department stores across the country.
CANTABIL RETAIL INDIA LTD (NSE: CANTABIL)
Cantabil’s FY23 revenue grew 44 per cent to ₹552 crore; EBITDA increased 49 per cent to ₹163.65 crore and PAT increased to ₹67.24 crore, growing ~77 per cent. Incepted in 1989, Cantabil Retail India Ltd is in the business of designing, manufacturing, branding and retailing of apparels and accessories. In its mid-May released performance report, its EBITDA and PAT margins remained 29.66 per cent and 12.19 per cent respectively.
For the last quarter ending on March 31, 2023, the revenue from operations stood at ₹173 crore as against ₹133 crore in Q4, FY22, reflecting a growth of 30 per cent mainly on account of larger average transaction amounts, as well as increased customer visits and the introduction of newly established stores. EBITDA excluding other income was ₹41.73 crore, up 23.38 per cent primarily owing to improved ‘Per Unit’ prices and more favourable procurement costs, EBITDA margin being 24 per cent. Profit After Tax (PAT) of ₹16.88 crore was 9.77 per cent of sales, and basic EPS stood at ₹10.34.
The company added 69 stores during FY23 across 14 states, thereby increasing its retail presence and brand visibility. Targeting a large base of customer in the mid-premium segment, the company is seeking new locations and geographies with increased ticket size. During the period, Cantabil also expanded its reach across various online platforms.
AMERICAN EAGLE OUTFITTERS (NYSE: AEO)
Announced on May 24, 2023, American Eagle Outfitters reported its first quarter result in line with the plan. The NYSE-listed global specialty fashion retailer delivered total net revenue of $1.1 billion in the first quarter of FY23 ended April 29, 2023, growing 2 per cent on Q1, FY22. In this, store and digital revenues were up 5 per cent and 4 per cent respectively, while Aerie was up 12 per cent.
American Eagle revenue declined 2 per cent to $671 million. Gross profit of $413 million increased almost 6 per cent compared to $388 million in the first quarter of 2022, representing a margin of 38.2 per cent versus 36.8 per cent last year. The merchandise margin expanded, driven by lower transportation costs with a partial offset from higher markdowns, and lower compensation and delivery costs also having a positive impact on margins offset by higher rent linked to new store openings. With 5 per cent increase in selling, general and administrative (SG&A) expenses of $312 million, the SG&A increased 60 basis points as a rate to sales compared to Q1, FY22. Non-GAAP operating income was $44 million ($23 million GAAP operating income) – a 4.1 per cent margin, excluding $21 million of impairment, restructuring and other charges related to Quiet Platforms. Non-GAAP diluted EPS of $0.17 (GAAP EPS being $0.09) too excluded $0.08 of impairment and restructuring charges.
The management’s second quarter outlook reflects revenue down low-single digits to last year with operating income to remain in the range of $25 – $35 million. This assumes gross margin recovery y-o-y as the company cycles pressure from end of season sell-offs and elevated freight costs. For full year, the management expects revenue in the range of flat to down low-single digits compared to last year, while operating income to stay somewhere in between $250 and $270 million.
MODERATE: GROWTH IN EITHER SALES OR PROFITS
CANADA GOOSE HOLDINGS (NYSE & TSX: GOOS)
Founded in 1957, Toronto-based Canada Goose reported its last quarter and full FY23 (April 2, 2023- ended) performance on May 18, 2023. The lifestyle brand and a leading manufacturer of performance luxury apparel, Canada Goose’s quarter revenue grew 31.4 per cent (30.1 per cent in constant currency) with strong growth from Asia-Pacific (65.4 per cent) and EMEA (27.3 per cent). Reported in Canadian dollars, the quarterly revenue stood at $293.2 million, gross profit at $190.3 million and operating income at $17.2 million (5.9 per cent) against last year’s respective figures of $223.1 million, $154.1 million and $0.9 million.
On full fiscal basis, the revenue increased from $1,098.4 million in FY22 to $1,217 million (up 10.8 per cent), while operating income decreased from $156.7 million (14.3 per cent of sales) to $135.5 million (11.1 per cent of sales), which is a reduction of 13.5 per cent.
For Q1, FY24, the company expects total revenue of $70 million to $80 million and $1.4 billion to $1.5 billion for full FY24. The full year adjusted EBIT is expected in the range of $210 million to $240 million, representing a margin of 15-16 per cent with adjusted net income per diluted share to be between $1.2 and $1.48.
ROSS STORES INC. (NASDAQ: ROST)
Ross stores, Inc., on May 18, 2023, reported earnings per share for the 13 weeks ended April 29, 2023 of $1.09 on net earnings of $371 million. These results compared to earnings per share of $0.97 on net income of $338 million for the 13 weeks ended April 30, 2022. Sales for the first quarter of 2023 were $4.5 billion for NASDAQ-listed California-based fashion company, up from $4.3 billion in the prior year; comparable store sales rising 1 per cent. The company saw first quarter sales relatively in line with its expectations amidst continued inflationary pressures impacting its low-to-moderate customers. For the period, the operating margins were 10.1 per cent versus 10.8 per cent in 2022, reflecting higher incentive compensation versus last year when it performed below expectations. The company repurchased 2.2 million shares of common stock for an aggregate price of $234 million during the quarter.
Looking forward, for the 13 weeks ending July 29, 2023, comparable store sales are projected to remain relatively flat. For the second quarter, the EPS is forecast to be in the range of $1.07 to $1.14 against $1.11 last year. Basis Q1 performance and Q2 forecast, comparable store sales for the 52 weeks ending January 27, 2024 are expected to be relatively flat; EPS for the 53 weeks ending February 2024 is likely to range between $4.77 to $4.99 compared to $4.38 for the 52 weeks ended January 28, 2023. This guidance includes an estimated benefit to full year 2023 earnings per share of approximately $0.15 from the 53rd week.
WEAK: NO GROWTH EITHER IN SALES OR PROFITS
VF CORP (NYSE: VFC)
Denver-based VF Corp reported its full fiscal 2023 (ended April 1, 2023) results inclusive of fourth quarter on May 23, 2023. The result, in line with the guidance, also declared dividend of $0.30 per share along with issuing of fiscal 2024 outlook.
The quarter’s revenue at $2.7 billion was 3 per cent down but flat in constant currency, while full fiscal revenue of $11.6 billion decreased 2 per cent yet managed a 3 per cent increase in constant currency terms, with EPS and adjusted EPS yield of $0.31 and $2.10 against $3.10 and $3.18 of FY2022 respectively. The quarterly results were led by ongoing strength in The North Face and the company’s international business, with accelerating momentum seen in Greater China – resulting in 10 out of 12 brands with flat or growing revenue, and five up double digits amidst challenging consumer environment, the company observed. The quarter’s gross margin decreased 230 basis points to 49.6 per cent, primarily driven by elevated promotional activity and increased product costs. On reported basis, the operating income was $161 million (5.9 per cent of sales) while on adjusted basis it declined 32 per cent (25 per cent in constant currency) to $152 million (5.6 per cent of sales).
On a full year basis, gross margin was down 200 basis points to 52.5 per cent (220 basis points down to 52.6 per cent on adjusted basis); the operating income of $328 million (2.8 per cent on reported basis) fell 27 per cent; and EPS of $2.10 on adjusted basis was down 34 per cent.
Outlook 2024 sees total VF revenue flat to up slightly in constant dollars, including first quarter revenue down in high-single digits owing to a challenging US wholesale environment; gross margin up at least 100 basis points benefitting from a lower promotional environment across marketplace; and operating margin expanding as a result of higher gross margins supporting modest increase in SG&A expenses. The outlook also estimates EPS of $2.05 to $2.25 and free cash flow of about $900 million.
Fibre2Fashion News Desk (WE – SB)