Fashion retailers display resilience in Q1 & Q2 results

Strong: Growth In Both Sales & Profits

Gunze Ltd | (TYO: 3002)

Gunze Ltd, one of the oldest companies in Japan, announced its Q1 FY24 financial results, which ended on June 30, 2024, in early August. This more-than-a-century-old company is involved in the businesses of functional solutions, medical materials, apparel, and lifestyle creations. Net sales for the Osaka-headquartered company for the reported quarter were ¥33,382 million (~$230 million), up 5.3 per cent from ¥31,706 million (~$218 million) in Q1 FY23. The increase in net sales was due to the strong performance of the functional solutions business, where the materials category was on a recovery trend, and the medical business, which saw an expansion of new products and products for China. The apparel business recorded net sales of ¥14,795 million (~$102 million), up by 1.5 per cent year-on-year. Operating profit was ¥563 million (~$4 million), up by 64 per cent.

Operating profit increased by 37.5 per cent to ¥2,083 million (~$14.34 million), and ordinary profit rose by 38.5 per cent to ¥2,272 million (~$16 million). This growth was primarily due to the increase in profits from the functional solutions business and the medical business, as well as restructuring in the sports club sector. Profit attributable to owners of the parent increased marginally by 0.9 per cent, mainly due to a decrease in gains on the sale of investment securities.

The company decided not to change its previously announced consolidated financial results forecast for the fiscal ending March 31, 2025, which was released on May 14, 2024.

Boot Barn Holdings | (NYSE: BOOT)

Boot Barn’s first quarter of fiscal 2025, ended June 29, 2024, resulted in a 10.3 per cent increase in net sales over the prior-year period, reaching $423.4 million. This growth includes a 1.4 per cent increase in same-store sales, comprising a 0.8 per cent increase in retail store same-store sales and a 6.7 per cent increase in e-commerce same-store sales. The increase in net sales was also attributed to incremental sales from new stores.

Boot Barn, the California-based lifestyle retailer of western and work-related footwear, apparel, and accessories for men, women, and children, offers its loyal customer base a wide selection of work and lifestyle brands. The company, with more than 400 stores in 46 states across the US, reported a net income of $38.9 million, or $1.26 per diluted share, compared to $34.3 million, or $1.13 per diluted share, in Q1 FY24.

In its outlook for the second quarter ending on September 28, 2024, the company expects total sales of $405 million, representing a growth of 8.2 to 10 per cent, and net income in the range of $33.2 million to $35.7 million.

For the full fiscal 2025, ending on March 29, 2025, the company expects total sales between $1.816 billion and $1.850 billion, reflecting a growth of 8.9 to 11 per cent, with net income projected to be between $156.1 million and $165.4 million, or net income per diluted share of $5.05 to $5.35.

Ross Stores Inc | (NASDAQ: ROST)

NASDAQ-listed Ross Stores, Inc reported earnings per share of $1.59 on net income of $527 million for the 13 weeks ended August 3, 2024, in late August. This is compared to earnings per share of $1.32 on net income of $446 million for the 13 weeks ended July 29, 2023. The comparison pertains to the company's second-quarter performance for both fiscals.

During the quarter, total sales increased by 7 per cent to $5.3 billion, up from $4.9 billion for the same quarter of the prior year. Comparable store sales increased by 4 per cent compared to last year.

Announcing its first half-year performance alongside the Q2 FY24 results, the company reported earnings per share of $3.05 on net income of $1.0 billion for the six-month period ended August 3, 2024. The comparable results for the first half of 2023 were earnings per share of $2.41 on net income of $818 million. Sales for the first six months of 2024 grew to $10.1 billion, up from $9.4 billion in the prior year. Comparable store sales for the first half of 2024 increased by 3 per cent.

Based on the company’s first-half results and second-half guidance, earnings per share for the 52 weeks ending February 1, 2025, are now expected to be in the range of $6.00 to $6.13, compared to $5.56 last year.

Ross Stores, Inc is a company listed on the S&P 500, Fortune 500, and NASDAQ 100 (ROST) and is headquartered in Dublin, California.

American Eagle Outfitters | (NYSE: AEO)

American Eagle Outfitters’ second quarter of fiscal 2024, ended August 3, 2024, was marked by the sixth consecutive quarter of record revenue. While the reported quarter is compared to the 13 weeks ended July 29, 2023, the comparable sales metrics are presented for the 13 weeks ended August 3, 2024, compared to the 13 weeks ended August 5, 2023.

For the quarter, total net revenue of $1.3 billion increased by 8 per cent, benefitting from an approximately $55 million positive impact from the retail calendar shift. Store revenue grew by 7 per cent, and digital revenue increased by 12 per cent.

Operating income increased by 55 per cent to $101 million, inclusive of an approximately $20 million positive impact from the retail calendar shift. The operating margin expanded by 240 basis points to 7.8 per cent, and diluted EPS was $0.39.

The company reported an ending inventory increase of 4 per cent to $664 million.

For the third quarter, the company expects operating income to be in the range of $120 to $125 million and comparable sales to increase by 3 to 4 per cent.

Pittsburgh-based American Eagle Outfitters is a global specialty retailer offering high-quality, on-trend clothing, accessories, and personal care products at affordable prices under its American Eagle and Aerie brands.

Burlington Coat | (NYSE: BURL)

Burlington Stores, Inc, a Fortune 500 company headquartered in New Jersey, is an off-price retailer of high-quality, branded apparel, footwear, accessories, and home merchandise at everyday low prices. The company operates over 1,000 stores in 46 states across the US.

In its second quarter results, which ended on August 3, 2024, and were reported at the end of August, the NYSE-listed company reported total sales of $2,461 million, up 13 per cent, while comparable store sales increased by 5 per cent on a year-over-year quarterly comparison. The gross margin was 42.8 per cent, compared to 41.7 per cent in Q2 FY23, driven by lower markdowns.

Net income was $74 million, or $1.15 per share, compared to $31 million, or $0.47 per share, a year ago. Adjusted net income, excluding in both periods $2 million of expenses (net of tax) associated with the acquisition of Bed Bath & Beyond leases, was $80 million, or $1.24 per share, compared to $41 million, or $0.63 per share, in Q2 FY23.

For the first six-month period of FY24, total sales increased by 12 per cent, and net income increased by 139 per cent compared to the same period in FY23.

For the full fiscal 2024 (52 weeks ending February 1, 2025), the company now expects total sales to increase in the range of 9 to 10 per cent, on top of the 10 per cent increase for the 52 weeks ended January 27, 2024, and an adjusted EBIT margin to increase in the range of 50 to 70 basis points.

Moderate: Growth In Either Sales or Profits

Nordstrom | (NYSE: JWN)

Nordstrom Inc., an American luxury department store chain headquartered in Seattle, ended its second quarter of fiscal 2024 on August 3, 2024. The company reported net earnings of $122 million, or earnings per diluted share of $0.72, and EBIT of $190 million. Total company net sales increased by 3.4 per cent, and comparable sales increased by 1.9 per cent compared with the same period in FY23, while GMV increased by 3.5 per cent.

During the quarter, net sales of the Nordstrom banner, as well as comparable sales, each increased by 0.9 per cent. Net sales for Nordstrom Rack increased by 8.8 per cent, and comparable sales increased by 4.1 per cent. Digital sales increased by 6.2 per cent compared with the same period in fiscal 2023.

Gross profit, as a percentage of net sales, was 36.6 per cent, up 155 basis points, primarily due to strong regular price sales and leverage on higher total sales.

EBIT in the second quarter of 2024 was lower at $190 million compared to $192 million during the same period in fiscal 2023. Adjusted EBIT of $244 million excluded a charge primarily related to supply chain asset impairment.

The company updated its financial outlook for fiscal 2024, reflecting the charge primarily related to supply chain asset impairment and related tax impacts recorded in the second quarter, as well as the estimated accelerated technology depreciation impacts expected in the second half of FY24.

Duluth Holdings Inc | (NASDAQ: DLTH)

In a late August release, Wisconsin-headquartered fashion and lifestyle company Duluth Holdings reported its Q2 FY24 financial results for the quarter ended July 28, 2024. The net sales of the NASDAQ-listed company for the reported quarter increased by 1.8 per cent to $141.6 million, compared to $139.1 million in the same quarter of the previous fiscal. This growth was due to a 5.6 per cent increase in direct-to-consumer (DTC) sales driven by higher site conversion rates, partially offset by a 4.4 per cent decrease in retail net sales due to slower traffic, though this was somewhat mitigated by strong conversion rates.

Gross profit increased to $74.0 million, or 52.3 per cent of net sales, up 90 basis points compared to $71.5 million, or 51.4 per cent of net sales, due to sourcing initiatives. However, restructuring expenses and income tax benefits caused the net loss to expand from $2 million in the same quarter of the last fiscal to $3.7 million.

On a six-month comparison, net sales dropped from $262.8 million in H1 FY23 to $258.3 million in H1 FY24, and net loss increased to $11.6 million compared to $5.9 million.

The company reaffirmed its FY24 outlook, expecting net sales of approximately $640 million, an adjusted EPS of approximately ($0.22) per diluted share, and an adjusted EBITDA of approximately $39 million.

Weak: No Growth In Sales & Profits

VF CORP | (NYSE: VFC)

Denver-based VF Corp reported its financial results for Q1 FY25, ended June 29, 2024, on August 6, 2024, announcing a quarterly per share dividend of $0.09. The company's revenue of $1.9 billion was down 9 per cent, or 8 per cent in constant currency terms. Brand-wise, The North Face declined by 3 per cent (2 per cent in constant currency), and Vans declined by 21 per cent compared to the same quarter of the previous fiscal. Global brand direct-to-consumer (DTC) sales were up 6 per cent (8 per cent in constant currency), with broad-based DTC growth in all regions.

The NYSE-listed VF Corporation, a global apparel, footwear, and accessories company founded in 1899, reported an 80-basis point drop in gross margin to 52 per cent. This included a 60-basis point drop due to an unfavourable rate caused by foreign currency headwinds, and a 20-basis point drop attributed to an unfavourable mix. The operating margin of 12.6 per cent was down 1,220 basis points, and the adjusted operating margin of 4 per cent was down 360 basis points.

The company will complete the divestiture of Supreme by the end of calendar year 2024, after which Supreme is expected to be reported as discontinued operations beginning in Q2 FY25.

ALCHEMPro News Desk (WE - SB)