Mixed results but overall growth for global fashion companies in 2024

The fashion segment, represented by seven companies in this article, including two e-commerce players, reported not a single 'Weak' performance for the period ended September 30, 2024. Both e-commerce companies delivered 'Strong' performances, and the remaining five companies reported at least a 'Moderate' performance.

Strong: Growth In Both Sales & Profits

Delta Galil Industries (TLV: DELT)

Delta Galil, the global manufacturer and marketer of branded and private label intimate, activewear, loungewear, and denim apparel for ladies, men, and children from Israel, reported third-quarter results on November 15, 2024, with a record third-quarter sales increase of 13 per cent to $524.2 million, driven by growth across all channels. The gross margin was 41.6 per cent, up 70 basis points. Net income also increased by 9 per cent to $32.0 million, compared to $29.5 million in the third quarter last year.

For the nine-month period, net income increased by 37 per cent to $65.1 million, compared to $47.6 million in the same period last year. Net income, excluding non-core items net of tax, increased by 26 per cent to $67.6 million, compared to $53.8 million in the first nine months of 2023. The company distributed a dividend of $8.1 million, or $0.31 per share.

Reaffirming its FY24 guidance, the Caesarea-headquartered company projected sales in the range of $1,991.0–2,031.0 million (FY23: $1,857.7 million), EBIT of $173.0–183.0 million (FY23: $153 million), EBITDA of $266.3–276.3 million ($246.8 million), net income of $106.9–114.7 million ($91.6 million), and diluted EPS of $3.82–4.11 (FY23: $3.25).

Amazon.Com (NASDAQ: AMZN)

The third-quarter results for the world’s largest e-commerce player, Amazon.com, were released on the last day of October 2024. The net sales of the Seattle-headquartered company during the quarter were $158.9 billion, up 11 per cent from $143.1 billion in Q3 FY23. All markets, including North America (up 9 per cent to $95.5 billion), International (up 12 per cent to $35.9 billion), and AWS (up 19 per cent to $27.5 billion), registered sales increases. Operating income increased to $17.4 billion; and net income increased to $15.3 billion in the third quarter, or $1.43 per diluted share, compared with $9.9 billion, or $0.94 per diluted share in Q3 FY23.

The company also announced Q4 FY24 guidance: net sales are expected to be between $181.5 billion and $188.5 billion, or to grow 7 to 11 per cent compared with Q4 FY23, under the anticipation of an unfavourable impact of approximately 10 basis points from foreign exchange rates. Operating income is expected to be between $16.0 billion and $20.0 billion, compared with $13.2 billion in the same quarter last year.

ZALANDO SE (ETR: ZAL)

The German fashion e-commerce player, Zalando SE, also delivered positive growth in business and, along with Amazon.com, represented a ‘Strong’ performance for the online fashion segment.

The company’s third quarter and nine-month (both ended September 30, 2024) gross merchandise value (GMV) increased by 7.8 per cent to €3,458.5 million (~$3,624 million) and 4.4 per cent to €10,618.6 million ($11,126.28 million) compared to the respective periods of FY23. For both periods, respective revenues increased by 5 per cent and 2.6 per cent, and EBIT, in euro terms, grew more than 100 per cent with respective EBIT margins increasing by 3.7 percentage points and 2.5 percentage points.

Other key performance metrics, such as the number of orders, average GMV per active customer, average order per customer, average basket size, and active customer count, all registered an increase across reported periods. Although free cash flow during the third quarter remained negative, it improved from €152.4 million ($159.69 million) in Q3 FY23 to €132 million ($138.31 million) in Q3 FY24. On a nine-month basis, it increased from a loss of €26.6 million ($27.87 million) last year to a profit of €147.6 million ($154.66 million).

Moderate: Growth In Either Sales Or Profits

Aeffe Spa (BIT: AEF)

Aeffe Spa—a luxury company listed on the Euronext Star Segment of the Euronext Milan Market of Borsa Italiana that operates both in the prêt-à-porter, and footwear and leatherwear sectors with a portfolio of international brands including Alberta Ferretti, Philosophy di Lorenzo Serafini, Moschino, and Pollini—released its interim consolidated financial statement on November 15, 2024, for the first nine-month period of FY24.

The Group achieved revenues of €207.8 million ($218.21 million) compared to €252.8 million ($265.46 million) in 2023, showing a 17.8 per cent decline at current exchange rates and a 17.6 per cent decline at constant exchange rates. The prêt-à-porter and footwear and leather goods divisions decreased by 17.2 per cent and 22.6 per cent, respectively, in constant currency terms.

Consolidated EBITDA of €90.9 million (43.8 per cent of revenues) in the first nine months included the capital gain realised following the sale by Aeffe of ownership of the ‘Moschino’ brand in relation to all products belonging to product class 3 of the Nice Classification, comprising mainly cosmetics and perfumes, as well as scented candles and rooms and textile perfumes. The consolidated EBIT of €66.6 million remained positive compared to (-) €11.7 million in 2023, increasing by €78.3 million; and consolidated net profit amounted to €35.2 million (~$37 million) compared to a net loss of €17.8 million in 2023.

The release also announced the termination, by mutual agreement, of the existing collaboration relationship between Fenice Srl and Aeffe Spa, in order to pursue their respective business strategies.

Hanesbrands Inc (NYSE: HBI)

Winston-Salem-based Hanesbrands released its third-quarter financial results in early November. As one of the iconic apparel brands on the global fashion map, the company reported net sales of $937 million for the quarter, which decreased by 2.5 per cent compared to Q3 FY23. However, on an organic constant currency basis, net sales were consistent with the previous year. At the same time, profitability remained positive. Operating profit increased by 27 per cent to $103 million; the operating margin increased by 255 basis points to 11 per cent; adjusted operating profit increased by 46 per cent to $122 million, and adjusted operating margin increased by 435 basis points to 13 per cent compared to the previous year.

For fiscal 2024, which ends on December 28, 2024, the company expects net sales from continuing operations of approximately $3.61 billion, an approximate decrease of 4 per cent and 2 per cent on a reported and constant currency basis, respectively. Operating profit from continuing operations is expected to be approximately $174 million, while adjusted operating profit is expected to be $417 million. This forecast includes net sales of $900 million in the fourth quarter, operating profit of approximately $95 million, and adjusted operating profit of approximately $115 million.

The NYSE-listed company owns iconic brands such as Hanes (apparel), Bonds (Australian staple), Maidenform (shapewear), and Bali (bra brand).

Marimekko (HEL: MEKKO)

Marimekko reported its interim financial results for the third quarter of its fiscal, spanning from January 1 to December 31, 2024, on November 6.

Marimekko's net sales decreased by 1 per cent and totalled €47.2 million ($49.46 million) (Q3, FY23: €47.9 million), weakened particularly by lower wholesale sales in Finland, while retail sales developed well in all market areas, especially in Finland, and grew in total by 12 per cent.

Operating profit declined to €11.1 million ($11.63 million) (Q3, FY23: €12.9 million). Comparable operating profit was behind the strong comparison period and totalled €11.1 million (Q3, FY23: €13.1 million), equalling 23.5 per cent of net sales (Q3, FY23: 27.4 per cent).

From January to September (9M), the company’s net sales grew by 4 per cent and amounted to €128.6 million ($134.75 million) (9M, FY23: €123.5 million), and operating profit amounted to €22.3 million ($23.37 million) (9M, FY23: €23.3 million). Comparable operating profit was €22.7 million (9M, FY23: €23.7 million), equalling 17.6 per cent of net sales (9M, FY23: 19.2 per cent). For this nine-month performance, Marimekko’s results fall under the 'Moderate' category.

The Finnish lifestyle design company, renowned for its original prints and colours, now expects net sales for 2024 to grow from the previous year’s €174.1 million ($182.42 million), and the comparable operating margin to be approximately 16 to 19 per cent versus 18.4 per cent (2023).

QVC (Qurate Retail, Inc) (NASDAQ: QRTEA, QRTEB, QRTEP)

Qurate Retail reported a 5 per cent decrease in sales, both in current and constant currency terms, for the third quarter, while growing its operating income by 1 per cent to $152 million, compared to $151 million in the same quarter last year. The Englewood, Colorado-based company acknowledged that the reported quarter was the most challenging of FY24, with revenue underperforming and resulting in significant bottom-line deleverage. Despite this, the company maintained a flat consolidated gross margin through disciplined cost management and reduced operating expenses (OPEX).

QxH reported declines across all categories, with revenue decreasing due to a 6 per cent drop in units shipped as well as lower shipping and handling revenue. QVC International’s constant currency revenue declined primarily due to a 3 per cent decrease in average selling price, partially offset by a 1 per cent increase in units shipped. Cornerstone revenue also decreased.

Cash at the company decreased by $337 million during the third quarter, primarily due to net debt repayment and capital expenditures during the period.

ALCHEMPro News Desk (SB - WE)