Global fashion performance 'not so strong' for third quarter

Strong: Growth In Both Sales & Profits

OVS SPA (BIT: OVS)

The Board of Directors of Italian registered company, OVS S.p.A. approved consolidated results, including both third quarter and nine-month, for the period February 1 to October 31, 2024, on December 16, 2024.

According to approved results, net sales of €414.7 ($432.35) million in the third quarter was up by 12.8 per cent owing to the growth performance across all the group’s brands and product categories. The strong acceleration in sales that characterised the quarter was supported by the favourable weather which resulted in strong footfall, and of a high conversion rate. EBITDA adjusted of €46.2 ($48.17) million was up by €11.1 million, compared to same quarter in FY23, grew 31.7 per cent; and, profit before tax adjusted of €24.1 ($25.13) million, up by €10.0 million, grew 70.9 per cent.

The same performance metrics reported for nine-month period, compared to same period of last fiscal, were net sales of €1,176 ($1,226.04) million, up by 6.7 per cent; EBITDA adjusted of €135.2 ($140.95) million, up by €13.7 million, increased 11.3 per cent; and, profit before tax adjusted of €72.3 ($75.38) million, up by €12.2 million, increased 20.4 per cent.

As of October 31, 2024, the average leverage ratio for the last 12 months was 1.32x, down from 1.41x as of October 31, 2023.

Considering reported sales performance, the company confirmed the expected growth in turnover and EBITDA for the entire fiscal year 2024, and a cash generation in line with the previous year.

Burlington Coat (NYSE: BURL)

New Jersey-based Burlington’s third quarter of current fiscal ended November 2, 2024 and was compared to Q3, FY23 that ended October 28, 2024. Total sales for the reported quarter reached $2,526 million registering an increase of 11 per cent while comparable store sales grew 1 per cent compared to Q3, FY23. Comparable gross margins were 43.9 per cent versus 43.2 per cent last year. As a percentage of sales, the operating expenses reduced to 35.4 per cent against last year’s 36.2 per cent which meant an increase in net income to $91 million or $1.40 per share against last year’s $49 million or $0.75 per share. Adjusted net income also increased from $71 million (Q3, FY23) to $100 million.

Reporting its consolidated nine-month performance along with third quarter results, the NYSE-listed off-price retailer and Fortune 500 company announced 11 per cent increase in total sales compared to same period of FY23. Net income increased 116 per cent to $243 million or $3.77 per share ($1.73 in 9M, FY23). 

For fourth quarter, company expects total sales to increase in the range of 5 to 7 per cent, and adjusted EBIT margin to decrease 50 to 80 basis points versus Q4, FY23.

For full fiscal ending February 1, 2025, the company forecasts total sales to increase in the range of 9 to 10 per cent on top of 10 per cent increase for the 52-weeks ended January 27, 2024, assuming a 2 per cent increase in comparable store sales. Adjusted EBIT margin to increase in the range of 60 to 70 basis points. The company is targeting to open 101 new stores by end of FY24.

Nordstrom (NYSE: JWN)

Nordstrom, Inc. reported third quarter net earnings of $46 million or diluted EPS of $0.27, and EBIT of $83 million in the last week of November 2024. For the reported quarter ended November 2, 2024, net sales increased 4.6 per cent versus the same period in FY23, total company comparable sales increased 4.0 per cent, and gross merchandise value (GMV) increased 5.3 per cent. Gross profit, as a percentage of net sales, of 35.6 per cent increased 60 basis points compared with 35 per cent in Q3, FY23, primarily due to strong regular price sales. In addition, the company ended the quarter with $1.2 billion in available liquidity that included $397 million in cash. As on report date, the company had opened 23 new stores in 2024, culminating into total store area of ~27 million square foot.

The company updated its financial outlook for fiscal 2024 too, reflecting the estimated accelerated technology depreciation impacts expected in Q4, FY24: revenue range, including retail sales and credit card revenues, being flat to 1.0 per cent growth versus the 53-week FY23, including an ~135 basis point unfavourable impact from the 53rd week; comparable sales growth of 1.0 to 2.0 per cent versus 52 weeks in fiscal 2023; EBIT margin of 3.0 to 3.4 per cent of sales; and, an adjusted EBIT margin of 3.6 to 4.0 per cent of sales.

Ross Stores Inc. (NASDAQ: ROST)

Dublin, California-headquartered Ross Stores, Inc.’s third quarter ended November 2, 2024 with sales of $5.1 billion, comparable to sales of $4.9 billion in the third quarter of FY23 that ended October 28, 2023, with comparable store sales growth of 1 per cent. The net income (earnings) of S&P 500, Fortune 500, and Nasdaq 100 company for the third quarter increased to $488.81 million from $447.3 million in Q3, FY23.

For the nine months ended November 2, 2024, EPS was $4.53 on net earnings of $1.5 billion, versus $3.74 per share on net income of $1.3 billion for the same YTD period in 2023. Sales for the first nine months of 2024 were $15.2 billion, with comparable store sales growing up by 3 per cent over the prior year.

For the 13 weeks ending February 1, 2025, the company projected comparable store sales to increase 2 to 3 per cent, while EPS for the fourth quarter is to be in the range of $1.57 to $1.64, compared to $1.82 for the 14 weeks ended February 3, 2024. Based on the reported results and fourth quarter forecast, EPS for the 52 weeks ending February 1, 2025, is now expected to be in the range of $6.10 to $6.17 versus $5.56 last year.

Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20 to 60 per cent off department and specialty store regular prices every day.

LPP Spolka Akcyjna (WSE: LPP)

The Polish company LPP registered a double-digit growth in third quarter sales encompassing both markets, Poland and abroad (up by 25 per cent). The beginning of the second half of 2024 at LPP was marked by positive consumer sentiment which got reflected in double-digit sales growth in both the traditional channel (up by 19.4 per cent) and online channel (up by 35.7 per cent) compared to same quarter last year. The online sales contributed more than 26 per cent of total sales. The company generated a gross margin of 54.8 per cent and a stable net profit of PLN 577 ($140.47) million. In turn, since the beginning of the year, the group has achieved over 21 per cent y-o-y growth in adjusted operating profit and nearly PLN 3 ($0.73) billion in EBITDA.

The Warsaw Stock Exchange-listed family business is one of the fastest growing clothing companies in Central Europe, which manages five fashion brands: Reserved, Cropp, House, Mohito and Sinsay, across 40 markets worldwide. By the end of 2025, the Gdansk-based manufacturer wants to double the number of Sinsay stores and increase the group’s sales network to 4,400 stores. As this would require significant expenditure, the capital expenditure was increased 79 per cent y-o-y, during the quarter, to PLN 519 million.

The company intends to increase the group’s revenue to PLN 26 ($6.3) billion with a gross margin of 52-53 per cent, double-digit growth in online sales and positive performance in LFLs in 2025.

Moderate: Growth In Either Sales Or Profits

American Eagle Outfitters (NYSE: AEO)

American Eagle Outfitters presented 13 weeks ended November 2, 2024 results compared to the 13 weeks ended October 28, 2023, as well as comparable sales metrics for the 13 weeks ended November 2, 2024 compared to the 13 weeks ended November 4, 2023. Total comparable sales increased 3 per cent, following 5 per cent reported comparative growth last year, while total net revenue of $1.3 billion declined 1 per cent adversely impacted by approximately $45 million from the retail calendar shift. Gross profit of $527 million decreased 3 per cent and gross margin dropped from 41.8 per cent in same period last year to 40.9 per cent. Bearing ~$20 million adverse impact of calendar shift, the operating income of $106 million reflected operating margin of 8.2 per cent. The adjusted operating income of $124 million translated into adjusted operating margin of 9.6 per cent that remained flat to last year. 

For Q4, FY24, comparable sales are expected to be up approximately 1 per cent, with total revenue to be down by 4 per cent including a roughly $85 million impact to be caused by the retail calendar shift and one less selling week. Operating income is expected to be in the range of $125 to $130 million, incorporating currency pressure from the strengthening in the US dollar, in addition to a $20 million drag from the retail calendar shift.

For full fiscal 2024, comparable sales growth of approximately 3 per cent and total revenue growth of 1 per cent, including the impact of one less selling week, are expected. Adjusted operating income is expected to be in the range of $428 to $433 million compared to adjusted operating income of $375 million in 2023, representing growth in the mid-teens.

American Eagle Outfitters, Inc. is a global specialty retailer that owns apparel brands American Eagle, Aerie, OFFL/NE by Aerie, Todd Snyder and Unsubscribed.

Azzas (AREZZO) (BVMF: ARZZ3)

As a result of the merger of the Soma Group into Arezzo & Co, Azzas 2154 (new name for Arezzo & Co) began to consolidate the Soma Group’s results in third quarter of FY24. Since the merger completed on July 31, 2024, the financial results incorporated the results of the Soma Group as of August 1, 2024 only. As a result, the company announced the unreviewed and unaudited Pro Forma financial indicators, merely informative, for the third quarter in mid-November. Accordingly, gross revenue increased 12.2 per cent to R$3,673.5 (~$594) million from R$3,274.3 ($529.3) million in Q3, FY23, with respective growths of 3.2 per cent, 17.1 per cent, 26.1 per cent and 13.1 per cent in footwear & accessories, women’s apparel, men’s apparel and democratic apparel. However, consolidated net income of the group dropped from R$229.4 ($37.09) million last year to R$163.8 ($26.48) million.

On nine-month basis, gross revenue increased from R$9,112.1 ($1,473) million to R$9,938.1 ($1,606.62) million, y-o-y, while net income decreased from R$620.5 ($100.31) million a year prior to R$421.70 ($68.17) million.

The Brazalian Belo Horizonte-based company, Azzas 2154 specialises in the footwear, bags, and women's accessories.

Adastria (TYO: 2685)

Consolidated net sales of Adastria, for nine-month period, increased from ¥203,252 (~$1,288) million to ¥220,089 (~$1,395) million, up by 8.3 per cent when compared to same period of the previous fiscal. However, this growth was faded by decreased profitability: operating profit dropped 9.4 per cent from ¥16,306 ($103) million to ¥14,770 ($93.5) million; ordinary profit decreased 10.4 per cent from ¥16,708 (~$106) million last year to ¥14,967 (~$95) million; and, net income attributable to owners of the parent also fell below ¥11,541 million of 9M, FY24 to ¥9,907 million.

In the second quarter of the current fiscal year, a provisional accounting treatment was used for the acquisition of Today’s Special Co., Ltd., which got completed on July 1, 2024. This treatment was finalised in the third quarter of the current fiscal year.

Forecasting its consolidated result for full FY25 (March 1, 2024 to February 28, 2025), Osaka-headquartered and Tokyo Stock Exchange-listed company expects net sales of ¥290,000 million, up by 5.2 per cent y-o-y; operating profit of ¥19,000 ($1,838) million, up by 5.5 per cent; and, net income attributable to owners of the parent of ¥12,700 ($80.48) million, down by 6 per cent.

Since company did not report third quarter results separately, the company’s nine-month performance puts it under ‘Moderate’ category.

Weak: No Growth In Sales & Profits

Carter’s Inc. (NYSE: CRI)

The largest branded marketer of apparel for babies and young children in North America, Carter’s, Inc. reported a 4.2 per cent decrease in net sales of $758.5 million for its third quarter ended September 28, 2024, citing macroeconomics factors, including inflation and higher interest rates, weighing on families with young children and demand for NYSE-listed company’s brands – Carter’s and OshKosh B’gosh. US Retail, International, and US Wholesale segment net sales went down by 5.8 per cent, 8.6 per cent and 0.5 per cent, respectively. The October-end release reported a 17.5 per cent decrease in operating income of $77 million (10.2 per cent of sales), compared to $93.4 million (11.8 per cent of sales) in the third quarter of fiscal 2023. Net income was down too, at $58.3 million or $1.62 per diluted share, compared to $66.1 million or $1.78 per diluted share same quarter last year.

For combined three quarters, net sales declined by 4.9 per cent, operating income reduced to $171.5 million versus $187.3 million, and net income decreased to $124 million versus $126 million, compared to same period of FY23.

For fiscal year 2024, the company reaffirmed its previously-provided guidance for net sales and adjusted operating income and also increased its outlook for adjusted diluted EPS based on its revised expectations for lower borrowing costs and a lower effective tax rate. With net sales projections in the range of $2.785 billion to $2.825 billion, adjusted diluted EPS is expected to stay between $4.70 and $5.15.

Duluth Holdings Inc. (NASDAQ: DLTH)

Duluth Holdings Inc., a lifestyle brand of men’s and women’s workwear, casual wear, outdoor apparel and accessories, announced its financial results for the fiscal third quarter ended October 27, 2024, this month. It reported net sales of $127.1 million ($138.2 million in Q3, FY23) and increased net loss of $28.5 million compared to net loss of $10.5 million in Q3, FY23.

The Mount Horeb, Wisconsin-based company ended the quarter with $9.3 million of cash and cash equivalents, net working capital of $60.6 million, $44.0 million outstanding debt on the Duluth Trading $200 million revolving line of credit and $165.3 million of liquidity.

The nine-month net sales decreased from $401.07 million for same period last year to $385.4 million, while net loss increased from $16.37 million to $40.12 million.

The company issued new guidance for full FY24, superseding its previous guidance. The company now expects net sales of approximately $640 million, gross margin reduction of approximately 125 basis points versus prior year, SG&A expenses, excluding the sales tax contingency, to deleverage by approximately 80 bps versus prior year capital expenditures, inclusive of software hosting implementation costs, of approximately $23 million.

Dillard’s Inc. (NYSE: DDS)

The ‘Weak’ third quarter performance for FY24 was reported by another NYSE-listed company from US – Dillard’s, Inc. which ended the quarter on November 2, 2024. During the quarter, both total retail sales and comparable store sales declined 4 per cent, with net income also going downward from $155.3 million in Q3, FY23 (ended October 28, 2023) to $124.6 million. The company also announced the purchase of $107.0 million (approximately 294,000 shares) of Class A Common Stock at an average price of $364.43 per share during the reported quarter.

On a 39-weeks i.e. nine-month period comparison, total retail sales were down 3 per cent and comparable store sales were down 4 per cent. Net income also dropped to $379.1 million from $488.3 million of last year.  

No announcement with regard to full fiscal guidance was provided.

Kohl’s Corp (NYSE: KSS)

Kohl’s Corporation’s third quarter financial results came in last week of November, according to which net sales decreased 8.8 per cent to $3.5 billion from net sales in same quarter of FY23, with comparable sales also reported to be down by 9.3 per cent. While gross margin, as a percentage of net sales, stood at 39.1 per cent increasing 20 basis points, the net income was $22 million or $0.20 per diluted share. In comparison, net income during same quarter last year was $59 million or $0.53 per diluted share.

Combining three quarters, net sales decreased 6.1 per cent to $10.2 billion, with comparable sales down 6.4 per cent from same period of FY23. Net income reported was $61 million or $0.55 per diluted share, compared to net income of $131 million or $1.18 per diluted share in the prior year. An operating cash flow of $52 million was reported too.

For the full FY24, having 52 weeks compared to 53 weeks in full FY23, the company is expecting net sales to decrease 7 to 8 per cent, comparable sales to decrease 6 to 7 per cent, and operating margin to stay in the range of 3 to 3.2 per cent.

Kohl’s is an omnichannel retailer that operates more than 1,100 stores in 49 US states, an online store Kohls.com, and the Kohl's App.

Macy’s Inc. (NYSE: M)

Headquartered in NY City, Macy’s, Inc. announced third quarter financial results (ended November 2, 2024) for FY24 on December 11, 2024, in which a decrease of 2.4 per cent to $4.7 billion was reported in net sales compared to Q3, FY23 (ended October 28, 2023). Comparable sales were also down by 2.4 per cent on an owned basis and 1.3 per cent down on an owned-plus-licenses-plus-marketplace basis. Sales of Macy’s (the brand) was down by 3.1 per cent, while those of company’s brands Bloomingdale and Bluemercury were up 1.4 per cent and 3.2 per cent, respectively. The net income for the group was $28 million against $41 million last year.

For 39-weeks period, nets sales decreased 2.98 per cent from $14,972 million to $14,525 million, and net income decreased from $327 million to $223 million.

The company updated its August 21, 2024-announced full year guidance for 2024, which now projects net sales of $22.3 billion to $22.5 billion, gross margin of 38.2 per cent to 38.3 per cent, and adjusted diluted EPS $2.25 to $2.50.

ALCHEMPro News Desk (WE - SB)