Challenges at retail continue to negatively affect the bottom line for companies along the value chain—except in for luxury and fast fashion.
Sears Canada reports loss despite comp store increases
Sears Canada today reported results for fourth quarter 2016, ended Feb. 28, 2017. The company was focused on a turnaround during the year, which touched on every part of the business but focused on product innovation, customer experience and brand positioning. Brandon G. Stranzl, executive chairman of Sears Canada, said the results show the changes are resonating with consumers.
As part of the company overhaul, which Stranzl characterizes as a total culture and leadership change, Sears Canada launched an off-price model and a rebranding of its house products under one label.
The retailer reported a 1.3% boost in same store sales for the quarter, compared to the same period in FY 2015. The company attributes the growth to a focus on its new price matching commitment on major appliances and mattresses, which has driving unit sales in all channels.
The company reported a net loss for the fourth quarter of $45.8 million Canadian ($33.7 million) or 45 cents per share compared to net earnings of $30.9 million Canadian ($22.7 million) or 30 cents per share in the fourth quarter last year. The gains from the previous year was based on the termination of the credit card agreement.
Revenue was down 16 percent in the quarter to $744.0 million Canadian ($546.9 million), hampered by store closures in 2016 as well as a reduction in catalog distribution, issues with the company’s new website and a reduction in merchandise pick-up locations.
Gross margin decreased by 400 basis points to 24.7% from 28.7% in the same quarter last year. The company plans the decline in part on fulfillment issues during the holidays, lower retail prices and more clearance items. Going forward the company plans to recoup its catalog losses with gains in e-commerce and earn higher margins with its out-the-door selling prices.
Adjusted EBITDA for the quarter was a loss of $63.7 million Canadian ($46.8 million), compared to a loss of $51.2 million during the same period the year prior.
Unifi counters domestic headwinds with international sales
Unifi, a leading recycled and synthetic yarn manufacturer, today reported its third quarter results for the period ended March 26, 2017, showing strong premium value added (PVA) yarn business, including Repreve, in Asia and Brazil amid domestic challenges.
Unifi reported gross margin was 13.1%, down from 14.5% in the same period last year. Net sales dipped to $160.9 million for the quarter compared to $161.3 million. Income fell to $9.1 million during the quarter compared to $10.0 million for the third quarter of the prior year, helped by foreign currency translation. Net income was down to $9.2 million compared to $9.7 million.
Adjusted EBITDA was $14.4 million for the third quarter of fiscal 2017, compared to $15.4 million for the third quarter of fiscal 2016.
“Our international strategy has not only enhanced our ability to serve our customers but also provided us with valuable diversification throughout fiscal 2017,” said Unifi president Tom Caudle. “During this fiscal year, strength in the international PVA business has counterbalanced headwinds in the domestic market driven by weak retail sales, elevated inventory levels, and pressure from higher raw material costs. For fiscal 2017, we continue to expect results to be broadly in-line with fiscal 2016.”
Boohoo FY17 revenue and profits leap
Fast fashion, e-commerce pure-play Boohoo released its fiscal year 2017 results for the company, which is comprised of Boohoo as well as two new acquisitions: PrettyLittleThing and NastyGal.
Revenue for the year, ended Feb. 28, increased by 51 percent over the previous year to 294.6 million pounds. Gross margin dropped to 54.6% from 57.8% in FY 2016. EBITDA reached 35.6 million pounds, representing 12.1% of revenue. That’s a 90 percent leap from 18.7 million pounds during the previous year. Profit nearly doubled to 30.9 million pounds ($39.74 million) versus 15.7 million pounds ($20.2 million) during FY 2016.
Revenue at is flagship brand increased by 45 percent to 283.4 million with 39 percent of revenue generated outside the U.K., up from 33 percent last year.
The number of customers shopping Boohoo increased by 29 percent to 5.2 million. While womenswear remained a strong performer, menswear sales doubled, owing to a wider assortment and the launch of the separate BoohooMan site. The company also introduced children’s wear and a sampling of maternity styles.
“The boohoo brand has achieved outstanding revenue growth and increased profitability margins during the year. We continued to grow strongly in the UK, our largest market, whilst international growth exceeded our expectations, particularly in the USA. Our customer proposition is proving consistently appealing,” the company noted.
PrettyLittleThings only contributed two months of revenue since its acquisition in January 2017, but revenue was up 210 percent in that period over the same time during the previous year.
The company expanded its warehouse, added office space and improved the Boohoo website.
The company expects group revenue growth of nearly 50 percent over 2017 for 2018, which includes growth from the recent acquisitions, and a group EBITDA margin of approximately 10 percent.
Kering soars on Gucci
Luxury fashion group Kering reported first quarter sales of 3.6 billion euros ($3.92 billion), fueled by record growth at Gucci.
Revenue for the group totaled 2.4 billion euros ($2.6 billion), a 34 percent increase over the same period last year. E-commerce sales for the group increased by 60.1%.
“Kering achieved a record performance in the first three months of the year, posting a sharp acceleration in sales growth. Benefitting from somewhat more favorable market conditions, our strong delivery primarily stems from meticulous execution of our strategy and the creative audacity of our Houses,” said Francois-Henri Pinault, chairman and chief executive officer. “In a climate of persistent geopolitical and macroeconomic uncertainties, our first quarter puts us in a particularly good position for the balance of the year. The Group will continue to focus on organic growth and market share gains, on value creation and ongoing operational and financial discipline.”
Gucci revenue increased by 51.4% to 1.3 billion euros ($1.4 billion) for the quarter, and comp store sales leapt 51.4%, boosted by Western Europe and Asia Pacific. All product categories contributed to the gains with double-digit growth.
Revenue increased by 35.4% to 364.4 million euros ($396.2 million) for Yves Saint Laurent and same store sales increased by double digits globally with the exception of Japan.
Bottega Veneta’s revenue increased by 4.7% to 280.4 million euros ($304.9 million) with comp store sales up 3.6% year on year.
The other luxury brands from the group achieved a 12.3% increase in revenue.