- Danielle Wightman-Stone |
Start-up Aday, which aims to simply consumer wardrobes with its line of durable, technical and sustainable womenswear, has secured 2 million dollars in its latest funding round including investment from H&M Co:Lab, H&M’s venture capital arm.
Additional investment also came from ADG, a consumer tech-focused fund and SoGal Ventures. As part of the fundraising round, Nanna Andersen, who started H&M’s venture capital arm, will join Aday’s board.
The investment will be used to expand its direct-to-consumer strategy with plans to open a permanent location in 2018, in addition to adding showroom capabilities to its London office to match its New York office.
Aday currently ships to the UK, the US, Canada, Australia, Hong Kong and Germany, and has stated that it is also looking to expand to Sweden, France and Singapore next year.
Founded in 2015, Aday has invested in research and developed to produce garments using recycled polyesters and polyamides, and to ensure that its seasonless, versatile range of clothing is all sweat-wicking, quick-drying, UV-protected, chlorine-protected and wrinkle-free, while also ensuring that the line is sustainable.
In total, Aday has raised 3.1 million dollars, previous seed investors included Venrex and Truestart.Image: Aday Facebook
- Prachi Singh |
Worldwide sales at Mothercare were down 1.4 percent at 627.9 million pounds (835 million dollars) with total UK sales down 1 percent at 229 million pounds (304 million dollars) and total international sales were down 1.7 percent at 398.9million pounds (531 million dollars). Group sales, the company said, which reflect UK sales and reported revenues or receipts from international partners were down 2.4 percent at 339.5 million pounds (451 million dollars).
Commenting on the first half update, Mark Newton-Jones, Chief Executive of Mothercare said in a media statement: “Our international markets remain challenging, primarily as a result of weak trading in the Middle East that is dragging down our overall performance overseas; there is no clear sight as to when things will bottom out in that region. Towards the end of the reporting period, and in subsequent weeks, we have seen a softening in the UK market with lower footfall and spend which is consistent with recent industry reports.”
First half result highlights of Mothercare results
Adjusted group loss before tax was 0.7 million pounds (0.9 million dollars), while UK adjusted losses increased to 9.6 million pounds (12.7 million dollars), and adjusted international profits were down 28 percent to 14.9 million pounds (19.8 million dollars).
In the UK, the company posted growth in like-for-like sales of 2.5 percent, supported by online growth of 5.3 percent. The company said, an improvement in gross margin of 34bps, was more than offset by costs primarily associated with the transformation, including warehouse transition costs, property and depreciation.
Adjusted EBITDA in the UK improved to 1 million pounds (1.3 million dollars), although adjusted losses in the UK increased to 9.6 million pounds (12.7 million dollars). Online sales were up 5.3 percent and now account for 42 percent of the total UK retail sales.
The company now has 75 percent of the store estate or 97 stores in the modern ‘club’ format and closed ten underperforming stores in the period as part of its planned closure programme.
International sales decline 1.7 percent
Total International sales fell by 1.7 percent to 393.2 million pounds (523 million dollars) in actual currency), while constant currency delivered a fall of 7.7 percent. Adjusted profits of international business was down 28 percent to 14.9 million pounds (19.8 million dollars). The company said that the adjusted profit was impacted by lower sales, with the benefit of currency translation.
Space was down 3 percent in the period, opening 68 stores whilst closing 83. The company has refurbished 127 stores in the modern ‘club’ format. Mothercare launched a new website in Pakistan and two new marketplaces in United Arab Emirates and India. The company is now trading online in 23 markets across 30 websites and marketplaces. Online sales have grown by 73 percent in moving currency and 57 percent in constant currency. The company added that international like-for-like sales were down 8 percent, with the Middle East continuing to be a drag, due to its scale, on overall performance. Russia has been impacted by unseasonably cold weather in the summer months and mild weather in autumn/winter.
Mothercare added that towards the end of the reporting period, and in subsequent weeks, it has seen a softening in the UK market with lower footfall and spend. International markets, the company said, in particular the Middle East, remain challenging.
- Meenakshi Kumar |
Bengaluru-based fashion marketplace Voonik says it will soon start looking for external funding. This Sequoia Capital-backed online brand aims to become EBITDA profitable by end of this year. Voonik clocked in Rs 116 crore revenue, which is a five-fold increase from last year.
As per Registrar of Companies (RoC) filings of fiscal year 2016, Voonik clocked in losses of over Rs 84 crore with a revenue of Rs 16 crore. The e-commerce company along with Sequoia counts RB Investments, Japanese e-commerce operator Beenos, Beenext, Tancom Investments and Times Internet, the digital product and investment arm of the Times Group as its investors.
The company says kids segment will contribute 15-20 per cent to its business. Both the frequency as well as number of items per orders is higher in kids’ wear, the company expects to penetrate a highly profitable market segment. Sujayath Co-founder and CEO of Voonik says over the last two months of festive season, Voonkik clocked 2.5x sales everyday for the four sales that were hosted even while bigger players were running their big sales. During October, throughout the month they had a consistent surge despite others’ bigger discounts. Nearly 75-80 per cent of sales were from Tier II, III cities and most traffic came in from mobile app and web while desktop traffic contributed just 5 per cent. Sujapyath further stated employee’s salary will be now be disbursed on operational costs and not be reliable on investor-cash which may bring in doubts and includes deference of salary if needed.
- Prachi Singh |
Guess, for its third quarter ended October 28, 2017 reported GAAP net loss of 2.9 million dollars compared to GAAP net earnings of 9.1 million dollars for the same quarter of fiscal 2017. GAAP diluted loss per share was 0.04 dollar compared to GAAP diluted earnings per share of 0.11 dollar for the prior-year quarter. Adjusted net earnings for the quarter were 10.4 million dollars, an 8.1 percent increase compared to 9.6 million dollars for the third quarter of fiscal 2017 and adjusted diluted earnings per share increased 9.1 percent to 0.12 dollar.
Commenting on the results, Victor Herrero, the company’s Chief Executive Officer, said in a media release, “Overall, our third quarter adjusted operating profit finished within our expectations, and adjusted earnings per share ended above the high-end of our guidance. We continue to see good momentum in Europe and Asia, where our revenues were up 19 percent and 17 percent, respectively, mainly driven by new store openings, wholesale growth and positive comp sales.”
Third quarter net revenue increase 3.3 percent
Total net revenue for the third quarter of fiscal 2018 increased 3.3 percent to 554.1 million dollars. In constant currency, net revenue increased by 0.6 percent.
Americas Retail revenues decreased 13.4 percent in US dollars and 14.3 percent in constant currency. Retail comp sales including e-commerce decreased 10 percent in US dollars and 11 percent in constant currency.
Europe revenues increased 18.8 percent in US dollars and 11.9 percent in constant currency, while retail comp sales including e-commerce increased 10 percent in US dollars and 4 percent in constant currency.
Revenues in Asia increased 16.8 percent in US dollars and 18.5 percent in constant currency. Retail comp sales including e-commerce increased 3 percent in US dollars and 5 percent in constant currency.
Americas Wholesale revenues decreased 2.5 percent in US dollars and 4.5 percent in constant currency. The company’s licensing revenues increased 9.1 percent in US dollars and constant currency.
GAAP operating loss for the third quarter was 1 million dollars compared to GAAP operating earnings of 15.1 million dollars in the prior-year quarter. GAAP operating margin in the third quarter decreased 300 basis points to negative 0.2 percent, from 2.8 percent in the prior-year quarter. The negative impact of currency on operating margin for the quarter was around 10 basis points.
For the quarter, adjusted operating earnings decreased 21.1 percent to 12.6 million dollars and adjusted operating margin was 2.3 percent, a decrease of 70 basis points compared to the same prior-year quarter.
Guess nine-month period GAAP net loss at 8.9 mn dollars
For the nine months ended October 28, 2017, the company recorded GAAP net loss of 8.9 million dollars, compared to GAAP net earnings of 16.2 million dollars for the nine months ended October 29, 2016. GAAP diluted loss per share was 0.12 dollar compared to GAAP diluted earnings per share of 0.19 dollar for the prior-year period.
Adjusted net earnings for the period were 7.1 million dollars, a 223.3 percent increase compared to 2.2 million dollars for the nine months ended October 29, 2016. Adjusted diluted earnings per share increased 300 percent to 0.08 dollar.
Total net revenue for the first nine months increased 3.7 percent to 1.59 billion dollars and in constant currency, net revenue increased by 3.1 percent. Americas retail revenues decreased 13.1 percent in US dollars and 13.2 percent in constant currency. Retail comp sales including e-commerce decreased 12 percent in US dollars and constant currency. Americas Wholesale revenues increased 2.5 percent in US dollars and 2.3 percent in constant currency.
Europe revenues increased 20.5 percent in US dollars and 19 percent in constant currency. Retail comp sales including e-commerce increased 7 percent in US dollars and 6 percent in constant currency.
Asia revenues increased 17 percent in US dollars and 17.1 percent in constant currency, while retail comp sales including e-commerce increased 4 percent in US dollars and constant currency. Licensing revenues were relatively flat in US dollars and constant currency.
GAAP operating loss for the first nine months of fiscal 2018 was 3.2 million dollars and GAAP operating margin decreased 30 basis points to negative 0.2 percent. Adjusted operating earnings increased 66.7 percent to 14.3 million dollars and adjusted operating margin was 0.9 prcent for the nine months ended October 28, 2017, an increase of 30 basis points compared to the same prior-year period.
Guess reveals Q4 and full year outook
For the fourth quarter and full year 2018, Guess expects consolidated net revenues in US dollars to increase between 10 percent and 12 percent and between 6 percent and 6.5 percent respectively. In constant currency, net revenues are expected to increase between 5 percent and 7 percent and between 4 percent and 4.5 percent respectively. GAAP EPS for the fourth quarter is expected to be between 0.48 and 0.55 dollar and between 0.36 to 0.43 dollar for the full year, while adjusted EPS for the quarter is anticipated to range between 0.48 to 0.55 dollars and between 0.56 and 0.63 dollar for the full year.
The company’s board of directors has approved a quarterly cash dividend of 0.225 dollar per share on the company’s common stock.
- Angela Gonzalez-Rodriguez |
Barclays takes sides with Inditex, sending H&M stock down
Barclays analysts downgraded Hennes & Mauritz (NHHMY) shares on Tuesday, arguing that its direct competitor, Inditex owned Zara, is the fast fashion retailer performing the best in Europe.
H&M Hennes & Mauritz AB (HNNMY) stock was under pressure Tuesday after Barclays analysts issued a market note downgrading the Swedish retailer to "underweight," after it concluded the "market is unwarranted in pricing similar cash flow growth for both H&M and Inditex."
Boris Vilidnitsky’s team of analysts further added that H&M's sales and store analysis points to a desolate outlook for the retailer, as much of its growth has come through opening new stores and sales have contracted across all key regions.
"We conclude that the market is pricing in similar future growth for both companies," Barclays wrote. "Given our analysis of store profitability and historical overview of margin evolution, we believe that the market is over-pricing H&M's free cash flow growth, while undervaluing that of Inditex."
On the back of the downgrade, H&M stock closed into the red, losing almost 1.60 percent of its value. The stock has been carrying a loss over the past six months, which extended Tuesday to a total 6.58 percent loss, according to ‘The Street’.
- Prachi Singh |
In its interim trading update, Billabong International has announced that the company’s EBITDA for the year of 51.1 million Australian dollars (38.5 million dollars) was up 2.8 percent on a constant currency basis, and was less than a million dollars below the guidance range that it provided at the 2016 AGM and affirmed again in February.
“The first half is weighted toward APAC and the retail channel, the second half toward the Americas and the wholesale channel. The earnings profile of the company has shifted substantially to the second half, a trend we expect to see again in the year ahead. Overall, FY17 was a tale of two halves – the first half down but more than offset by a very strong second half. At our last AGM, we set some ambitious goals for the balance of the 2017 financial year. We achieved those and came in just shy of our guidance – despite a very challenging environment, particularly here in Australia,” said Ian Pollard, the company’s Chairman commenting on the trading update.
Billabong gains in the Americas and Europe
The company said, its global sourcing and concept to customer initiatives lifted gross margins by 90 basis points for FY17 – 210 basis points in the second half – and it expects further margin gains in the year ahead in every region.
The Americas, which has long been the top priority for the group’s turnaround, saw a 46.9 percent rise in full year EBITDA, with gross margin improvement of 290 basis points for the year and 380 basis points in the second half. Total comparable retail sales gained 8 percent, with brick and mortar stores up 2.3 percent. Ecommerce, which is most developed in the Americas at 7.4 percent of total sales, grew 25 percent.
In Europe, the company achieved our fourth consecutive year of growth in EBITDA. After a soft first half, the region, in the second half to end the year saw 8.9 percent increase in EBITDA. The APAC region, however dropped 28.3 percent in EBITDA for the year.
“Our cost structure is more competitive, investments in our global platforms are coming on line, including the launch earlier this month of our new ecommerce platform with Surf Dive and Ski. We have challenges in Asia Pacific but we are dealing with issues in APAC aggressively and comprehensively. We have every confidence that the actions we’re taking will turn this region around – just as they did in the Americas, added Neil Fiske, MD and CEO of Billabong.
As far as product assortment is concerned, the company still witnessed some softness in non-apparel lines such as accessories and hardgoods. In Billabong mono-brand stores, the company’s lead categories – boardshorts and women’s swimwear sales rose 13 percent year-to-date in the 14 comparable stores. Element, meanwhile, reported a turnaround in multi-brand retail, up 11 percent on a comp store basis with margins up over 300 basis points.
FY18 EBITDA expected to cross 51 mn Australian dollars
Overall, the group expects the FY18 EBITDA (excluding significant items) to exceed the FY17 EBITDA of 51.1 million Australian dollars, subject to reasonable trading conditions and currency markets remaining relatively stable. Given the increasing proportion of earnings represented by the Americas and Europe, the earnings profile for FY18 is expected to be similar to that of FY17, with the first half EBITDA below the prior corresponding period and all the growth biased towards the second half.
- Prachi Singh |
Abercrombie & Fitch’s GAAP net income per diluted share was 0.15 dollar for the third quarter ended October 28, 2017, compared to 0.12 dollar for the third quarter last year. Excluding certain items, the company reported adjusted non-GAAP net income per diluted share of 0.30 dollar for the quarter, compared to 0.02 dollar last year. Net sales were 859.1 million dollars, up 5 percent over last year, with comparable sales for the third quarter up 4 percent and changes in foreign currency exchange rates benefiting net sales by 1 percent.
Commenting on the results, Fran Horowitz, the company’s CEO said in a press release: "We are pleased by the clear progress across all brands, delivering another quarter of sequential comparable sales improvement, and a return to positive comparable sales. This sales performance in combination with disciplined expense management drove profit growth, despite the promotional environment.”
Review of the third quarter sales results
By brand, net sales for the third quarter increased 10 percent to 508.1 million dollars for Hollister and decreased 2 percent to 351 million dollars for Abercrombie over last year. By geography, net sales increased 4 percent to 554.7 million dollars in the US and 5 percent to 304.4 million dollars in international markets over last year.
Direct-to-consumer sales grew to approximately 24 percent of total company net sales for the third quarter, compared to approximately 23 percent of total company net sales last year.
The gross profit rate for the third quarter was 61.3 percent, 80 basis points lower than last year on a constant currency basis, as lower average unit cost was more than offset by lower average unit retail. Net other operating income was 0.1 million dollars compared to 0.8 million dollars last year. Operating income was 22.7 million dollars compared to 19.6 million dollars last year. Excluding certain items, adjusted non-GAAP operating income was 37.3 million dollars compared to 13.6 million dollars last year.
Net income attributable to Abercrombie & Fitch Co. was 10.1 million dollars compared to 7.9 million dollars last year. Excluding certain items, adjusted non-GAAP net income attributable to Abercrombie & Fitch Co. for the third quarter was 20.5 million dollars compared to 1.4 million dollars last year.
On November 14, 2017, the board of directors declared a quarterly cash dividend of 0.20 dollar per share on the Class A Common Stock of Abercrombie & Fitch Co., payable on December 11, 2017 to stockholders of record at the close of business on December 1, 2017.
Abercrombie & Fitch reveals Q4 outlook
For the fourth quarter of fiscal 2017, the company expects, comparable sales to be up low-single digits, and net sales to be up mid- to high-single digits, including benefits from the 53rd week and changes in foreign currency exchange rates. The 53rd week is expected to benefit net sales by approximately 38 million dollars and operating income by approximately 2 million dollars.
Changes in foreign currency exchange rates is expected to benefit net sales by approximately 20 million dollars and operating income by approximately 5 million dollars, net of hedging. A gross profit rate is anticipated to be down approximately 100 basis points to last year's rate of 59.3 percent, in line with the third quarter year-over-year decline.
The company said, in addition to the five stores opened year to date, including two outlet stores, the company expects to open four new full-price stores in the fourth quarter. The company anticipates closing up to 60 stores in the US by year-end through natural lease expirations, including 14 stores closed to date.
- Simone Preuss |
The Accord on Fire and Building Safety in Bangladesh (Accord) has issued its quarterly progress report, finding that the overall remediation progress for the more than 1,600 factories covered by it stands at 80 percent. There is even 100 percent remediation from initial inspections at 120 factories and 90 percent or more at 665 factories. In addition, the Safety Committee training curriculum has been completed at 159 factories and 208 health and safety complaints have been resolved.
Thinking back to numerous garment factory fires and the collapse of the Rana Plaza building that triggered the massive remediation effort, it is reassuring to know that 94.8 percent of factories have removed lockable and/or collapsible gates, meaning workers have more chances of escaping the factory in an emergency. Prior to the initiative, factories often just had one escape route and door, which triggered panic among the workers and led to many being trapped.
Another big problem was fire warning systems and sprinklers not being in place. As of 1st October, 2017, the full installation of such systems including final verification of testing and commissioning has been completed at a little less than one third (31.3 percent) of all factories. However, most of them have submitted fire alarm and fire detection design drawings to the Accord and are in the process of ordering and installing the systems.
After four years of work in Bangladesh, the Accord finds: "While marking this significant progress, major life-threatening safety concerns remain outstanding in too many factories and need to be fixed urgently. These include: inadequately protected fire exits, inadequate fire alarm and fire protection systems and outstanding structural retrofitting work."
This shows that it is necessary that the Accord be extended beyond its initial five-year duration, which will run out in May 2018, also in view of the Alliance for Worker Safety in Bangladesh not being extended beyond 2018 but being transitioned to various local stakeholders. An extension for another three years of the Accord has already been announced and 49 brands and retailers have already signed the new Accord, covering almost 1,200 of the current Accord factories. However, more still need to join.
Currently, the Accord "monitors completion of remediation at the 1600+ factories with more than 100 engineers on staff who conduct up to 500 follow-up inspections each month. Each factory covered by the Accord is inspected approximately once every three to four months. The Accord secretariat further conducts targeted remediation review meetings with individual signatory companies to identify high priority factories where remediation must be accelerated."
Thanks to refinements made to Accord’s data system, the remediation progress at all factories covered can now be analysed more in-depth by looking at the progress rate of the most common fire, electrical and structural items that need to be remediated. These and other details, including the progress made over the years, can be found in the latest quarterly report via the Accord's website, bangladeshaccord.org.
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- Prachi Singh |
Gap’s third quarter diluted earnings per share were 0.58 dollar, while total company comparable sales increased 3 percent versus a 1 percent decrease last year, which the company said, excluded an estimated negative impact from the Fishkill distribution center fire of approximately 2 percentage points. Net sales for the third quarter were 3.84 billion dollars compared with 3.80 billion dollars for the third quarter of fiscal year 2016.
“Today, we are happy to report our fourth consecutive quarter of positive comps, reflecting the continued momentum in key parts of our business,” said Art Peck, President and CEO, Gap, in a media statement.
Gap Global posts positive same-store sales growth
Comparable sales at Old Navy Global: positive 4 percent versus positive 4 percent last year, excluding an estimated negative impact from the Fishkill distribution center fire of approximately 1 percentage point.
Comparable sales at Gap Global were positive 1 percent versus negative 4 percent last year, excluding an estimated negative impact from the Fishkill distribution center fire of approximately 4 percentage points, while Banana Republic Global reported negative 1 percent comparable sales rise versus negative 6 percent last year, excluding an estimated negative impact from the Fishkill distribution center fire of approximately 2 percentage points.
Gap raises FY17 earnings guidance
The company has raised its reported diluted earnings per share guidance for fiscal year 2017 to be in the range of 2.18 dollars to 2.22 dollars. Adjusted to exclude the second quarter benefit from insurance proceeds related to the Fishkill fire of about 0.10 dollar, the company now expects adjusted diluted earnings per share to be in the range of 2.08 dollars to 2.12 dollars.
The company noted that foreign currency fluctuations negatively impacted earnings per share for the third quarter by an estimated 0.02 dollars or about 3 percentage points of earnings per share growth compared with the adjusted earnings per share for the third quarter of fiscal year 2016. The company now expects comparable sales for fiscal year 2017 to be up low-single-digits.
Gap paid a dividend of 0.23 dollar per share during the third quarter and in addition, on November 9, 2017, the company announced that its board of directors authorized a fourth quarter dividend of 0.23 dollar per share.
The company ended the quarter with 3,639 store locations in 46 countries, of which 3,193 were company-operated. The company now expects to close about 30 company-operated stores, net of openings and repositions.
- Prachi Singh |
Nike’s board of directors has approved a quarterly cash dividend of 0.20 dollar per share on the company’s outstanding Class A and Class B Common Stock, which the company said an 11 percent increase over the prior quarterly dividend rate of 0.18 dollar per share.
“This marks Nike’s 16th consecutive year of increasing dividend payouts,” said Mark Parker, Chairman, President and CEO of Nike in a statement, adding, “Today’s announcement, combined with the four-year 12 billion dollars share repurchase program we announced in 2015, demonstrates our continued confidence in generating strong cash flow and returns for shareholders through our new Consumer Direct Offense as we continue to invest in fuelling sustainable, long-term growth and profitability.”
This dividend, Nike added is payable on January 2, 2018 to shareholders of record at the close of business December 4, 2017.