Columbia Sportswear is taking strides to reconnect with consumers, Debenham’s redesign strategy is in full gear and Kering plows along with strong third-quarter results.
In a Nutshell: Columbia Sportswear reported better-than-expected third quarter results, including continued strong sales growth in its European wholesale and U.S. direct-to-consumer businesses, as well as growth in all international regions. The company reiterated its full year 2017 financial outlook, which now incorporates the anticipated costs of Project CONNECT, meant to adjust to the accelerating structural change in retail by driving brand awareness and sales growth in its wholesale and direct-to-consumer channels and enhancing consumer experience and digital capabilities.
Sales: Net sales for the third quarter ended Sept. 30 increased less than 1 percent to $747.4 million compared with net sales of $745.7 million for the third quarter of 2016. Global Columbia brand net sales increased 2 percent to $598.3 million, while Sorel brand net sales decreased 7 percent to $81.7 million. Global prAna brand net sales fell 3 percent to $36.8 million, while Mountain Hardwear net sales dropped 4 percent to $29.4 million.
Earnings: Net income increased 5 percent to $87.7 million in the period from $83.6 a year earlier. Year-to-date net income was also up 5 percent to $112.2 million, including program expenses and discrete costs of about $5.4 million net of tax related to Project CONNECT.
CEO’s Take: Tim Boyle, president and Chief Executive Officer, said, “While our U.S. business adapts to ongoing structural changes, our improved profitability outside the U.S. illustrates the strength of our global business model. Our powerful balance sheet, with $430 million in cash and no long-term debt, provides the flexibility to adapt our business as our major markets evolve. It is from this position of strength and confidence that we are moving steadily forward on Project CONNECT, identifying strategic organizational and operational initiatives to accelerate execution of our strategic plan and to increase demand creation to drive further profitable growth in 2018 and beyond.”
In a Nutshell: The U.K.-based global retailer said it made good progress in setting the foundations for its Debenhams Redesigned strategy set in motion in April. The strategy is aimed at positioning the company to become the leader in Social Shopping centered around mobile interaction with customers.
The company said it has delivered a number of important operational changes to the business and has embarked on several strategic partnerships that will be key to accelerating the pace of change. These include this month’s upgrade to the mobile web site in partnership with Mobify, making it significantly faster and more responsive.
Sales: Group sales for the year ended Sept. 2 increased 2 percent to 2.95 billion pounds ($3.88 billion) from 2.9 billion pounds ($3.82 billion) in fiscal 2016. U.K. sales were flat at 2.35 billion pounds ($3.09 billion), while international sales grew 11.1% to 604.1 million pounds ($795.5 million). Group revenue increased 1.1% to 2.34 billion pounds ($3.08 billion), with the U.K. down 0.7% to 1.89 billion pounds ($2.49 billion) and international up 9.5% to 442.1 million pounds ($582.17 million).
Earnings: Earnings before interest, taxes, depreciation and amortization fell 7 percent in the year to 217 million pounds ($285.75 million) compared to 233.4 million pounds ($307.35 million) the previous year against a tougher trading background in the second half that was mitigated by tight cost management. U.K. EBITDA grew 10.1% to 174 million pounds ($229.13), while international EBITDA grew 8 percent to 43 million pounds ($56.62 million), with Denmark stores having a solid year and the Irish business benefited from restructuring.
CEO’s Take: Sergio Bucher, CEO, said, “We are making good progress with implementing our new strategy, Debenhams Redesigned, and are encouraged by the results from our initial trials, as well as the number of exciting new partners who want to work with us. The environment remains uncertain and we face tough comparatives over the key Christmas weeks. However, we are well prepared for peak trading and the early signs from our activity to date confirm that we are moving in the right direction towards a successful and profitable future for Debenhams.”
In a Nutshell: Kering’s luxury activities enjoyed another period of strong growth in the third quarter, with revenue up 26.6% as reported, and 32.3% based on a comparable group structure and exchange rates, to stand at 2.68 billion euros ($3.12 billion). Online sales expanded by nearly 80 percent, and appeal for the group’s luxury fashion houses was strong in all regions. Wholesale distribution also enjoyed robust growth of 21.7%, with substantial contributions from Gucci, Yves Saint Laurent and Balenciaga.
[Read more about Gucci: Gucci Goes Fur Free, Looking to Change Luxury Sector]
Sales: Kering achieved a 23.2% increase in revenue to 3.93 billion euros ($4.58) for the third-quarter ended September, with well-balanced contributions from all regions, with revenue up 36.8% for directly operated stores. The Luxury Group was up 32.3% on a comparable basis, with Gucci ‘s revenue spiking 49.4% and Yves Saint Laurent increasing 22.2% in the period. In the Sport & Lifestyle group, Puma scored a 17.3% gain.
CEO’s Take: François-Henri Pinault, chairman and CEO, said, “Thanks to flawless execution of our strategies at group level, as well as in each of our brands, we delivered another quarter of outstanding growth. We will keep concentrating on organic growth, value creation and strict financial discipline. Facing unfavorable currency impacts and a tougher base of comparison, we remain fully confident in Kering’s ability to achieve a record year, fueled by sector-leading growth.”
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