Luxury brands report robust sales growth in Q3 2023

STRONG: GROWTH IN BOTH SALES AND PROFITS

Hermès International (EPA: RMS)

Hermès's consolidated revenue at the group level was €10,063 million for the third quarter (Q3), ending in September, growing 22 per cent and 17 per cent at constant and current exchange rates, respectively. Within this, the quarter's sales amounted to €3,365 million and increased 16 per cent (at constant rates) compared to Q3 2022, despite a high comparison base, particularly in Asia. As for the group’s markets, Japan increased by 25 per cent, Asia (excluding Japan) grew by 21 per cent, France rose by 22 per cent, while both the Americas and Europe (excluding France) increased by 20 per cent each.

Both channels, stores and wholesale, posted growth rates of 22 per cent and 23 per cent, respectively, benefitting from the strong desirability of the collections and the strengthening of the exclusive distribution network. Among business segments, the leather goods and saddlery segment increased by 19 per cent owing to sustained demand; ready-to-wear and accessories delivered robust growth of 29 per cent; and the silk and textiles business increased by 17 per cent. At the end of September, there was a negative impact of €420 million as an outcome of currency fluctuations. However, figures pertaining to profitability performance were not reported.

During the nine-month period, Hermès International redeemed 38,812 shares for €72 million, excluding transactions completed within the framework of the liquidity contract. No changes were announced regarding the earlier outlook for 2023.

Hugo Boss (ETR: BOSS)

In its November 2 financial performance release, Hugo Boss reported a double-digit growth trajectory in Q3 2023, driven by robust top-line improvements across both brands (Hugo and Boss), all regions, and all consumer touchpoints. The successful launch of the Fall/Winter 2023 collections in August, as well as fashion events, increased the Group's sales by 15 per cent to a currency-adjusted €1,027 million, up from €933 million in Q3 2022, and by 10 per cent in the Group's currency. The currency-adjusted sales in the EMEA, Americas, and Asia-Pacific regions increased by 12 per cent, 22 per cent, and 21 per cent, respectively, compared to Q3 2022. Specifically, the US market within the Americas grew by over 20 per cent, while South East Asia & Pacific and China within the Asia-Pacific region grew by 17 per cent year-over-year.

The quarter’s Earnings Before Interest and Taxes (EBIT) of €103 million was a 12 per cent increase over last year's €92 million, raising the Group's EBIT margin by 20 basis points to 10 per cent (compared to 9.9 per cent in Q3 2022). However, the gross margin remained relatively steady at 60.7 per cent during the quarter, versus 60.8 per cent in 2022.

In its 2023 outlook, the Group continues to expect a sales increase in the range of 12 to 15 per cent, i.e., between €4.1 and €4.2 billion, and an operating profit increase of 20 to 25 per cent, between €400 million and €420 million.

LVMH Moët Hennessy Louis Vuitton (EPA: MC)

On October 10, LVMH Moët Hennessy Louis Vuitton—one of the world's leading high-quality-products groups—presented its Q3 and nine-month performance for 2023. For the nine-month period from January to September, the Group recorded an organic revenue growth of 14 per cent over the same period in 2022. All business groups, except Wines & Spirits, reported sustained organic revenue growth during this period. On a reported basis, the Group's revenue growth rate decreased to 10 per cent, increasing from €56,485 million in 2022 to €62,205 million in 2023, inclusive of a negative 4 per cent impact from exchange rates. LVMH’s markets in Europe, Japan, and the rest of Asia achieved double-digit organic growth. During this period, the Group’s Fashion & Leather Goods business reported an organic revenue growth of 16 per cent, while Selective Retailing experienced a 26 per cent growth. In Q3, 2023, the organic revenue growth was 9 per cent. The Group did not report its profitability performance.

WEAK: NO GROWTH IN SALES AND PROFITS

Kering SA (EPA: KER)

Kering SA, a global luxury group, witnessed a 13 per cent decrease in revenue on a reported basis and a 9 per cent decrease on a comparable basis for the third quarter of 2023, amounting to €4.5 billion. This figure includes a 6 per cent negative impact from exchange rate fluctuations and a 2 per cent positive impact from the acquisition of Maui Jim. Revenue from the directly-operated retail network fell by 6 per cent, while wholesale and other revenues sharply decreased by 20 per cent on a comparable basis, reflecting the Group’s ongoing efforts to tighten control over its distribution. The aggregate revenue for the nine-month period amounted to €14.6 billion.

During the quarter, individual brand revenues varied: Gucci's revenue was €2.2 billion, down 14 per cent on a reported basis and 7 per cent on a comparable basis; YSL's revenue reached €768 million, down 16 per cent and 12 per cent; Bottega Veneta's revenue was €381 million, down 13 per cent and 7 per cent; and revenue for the Group’s Other Houses was €805 million, down 19 per cent and 15 per cent.

No updates regarding profitability or the 2023 outlook were provided in the Group's October 24 release.

ALCHEMPro News Desk (WE - SB)