Victoria’s Secret’s CEO remains encouraged by Q1 despite a $4m net loss. Gap has increased its 2024 outlook after a strong Q1 and American Eagle Outfitters believes its positive first quarter reflects the strong execution of its growth strategy. However, charges hit Hanesbrands bottom line in the quarter while Geox felt the effect of weakness in its wholesale division.
Victoria’s Secret reports $4m net loss for Q1
Victoria’s Secret Q1 (13 weeks ended 4 May 2024 saw a 3% drop in net sales to $1.36bn compared to $1.41bn in the same period the year before. Its operating income was $26m compared to $28m in the first quarter of 2023 and it reported a net loss of $4m compared to net income of $1m in the same period the year before.
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CEO Martin Waters remains “encouraged” by the Q1 results which were at the “high-end” of its previously announced preliminary results.
He said: “We experienced sequential improvement in quarterly sales trends in North America in both our stores and digital business for both the Victoria’s Secret and PINK brands.”
He continued: “With some caution around the broader retail environment in North America, we are planning the business appropriately conservative in the near-term, but are encouraged by the start to May and the second quarter. Our brands are strong around the globe, and with the long-term health of the business in mind, we are focused on accelerating our core and our initiatives designed to leverage our market leadership position and unlock our opportunity to convert our significant cultural influence into long-term financial growth.”
Caleres Q1 sales down 0.5% amid ‘challenging consumer demand’
Caleres net sales were $659.2m, down 0.5% from the first quarter (Q1) of 2023.
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By GlobalDataEarnings before income taxes fell from $45.46m to $39.97m. Net earnings also saw a downward trend at $30.94m versus last year’s $34.73m.
Jay Schmidt, president and chief executive officer at Caleres believes that while the consumer demand environment remained challenging, the company achieved growth in sales and profitability from its lead brands and strong margin performance across the brand portfolio.
Schmidt said: “Caleres began 2024 in strong fashion, achieving earnings per share ahead of expectations, generating record first-quarter consolidated gross margin, and making significant progress on our key strategic initiatives, all while investing for the long-term.”
In the near term, the company expects to continue to focus on reducing debt and still expects borrowings under its asset-based revolving credit facility will be less than $100m by 2026.
Caleres shared it is reiterating its fiscal 2024 financial outlook and as previously noted, its fiscal 2024 is a 52-week year and compares to a 53-week year in fiscal 2023. Specifically, the company still expects consolidated net sales to be flat to up 2%, compared to 2023.
Kohl shares conservative 2024 outlook after Q1 loss
Kohl’s net sales decreased 5.3% to $3.18bn compared with the year prior, with comparable sales down 4.4%.
Operating income was $43m, a 1.3% drop compared to $98m in the prior year.
The company also lowered its 2024 guidance. It now expects full-year net sales to decline between 2% and 4%.
“Our first quarter results did not meet our expectations and are not reflective of the direction we are heading with our strategic initiatives,” CEO Tom Kingsbury said.
“We recognise we have more work to do in areas of our business. “We are approaching our financial outlook for the year more conservatively given the first quarter underperformance and the ongoing uncertainty in the consumer environment.”
Kingsbury noted positive trends in its women’s category and continued strong growth in its partnership with beauty retailer Sephora.
Capri Holdings Q4 revenue drops 8.4% on luxury’s softened demand
Capri saw its total revenue drop 8.4% from $1.33bn to $1.22bn in its fourth quarter ended 30 March 2024.
The company explained total retail sales declined in the mid-single-digits with trends impacted by softening demand globally for fashion luxury goods. In wholesale, revenue decreased in the high-teens driven by softer demand in the Americas and EMEA.
Loss from operations was $543m compared to loss from operations of $40m in the prior year primarily due to non-cash impairments. While, net loss was $472m as opposed to a net loss of $34m in the same period the previous year.
Chairman and CEO John D Idol was keen to highlight the 11.6m new customers added to Capri Holdings database as its core brands Versace, Jimmy Choo and Michael Kors “continued to resonate with consumers.”
However, he admitted that overall he was “disappointed” with the results.
He added that Capri “strongly disagrees” with the FTC’s decision to block its Tapestry acquisition.
he shared that Capri intends to vigorously defend this case in court alongside Tapestry and looks forward to the successful completion of the pending acquisition.
He said: “This combination will deliver value to our shareholders as well as provide new opportunities for our dedicated employees around the world as Capri Holdings becomes part of a larger and more diversified company.”
Gap Inc ups full year guidance after ‘strong’ Q1
Net sales for Q1 were up 3% to $3.4bn compared to last year. Comparable sales were up 3% year-over-year with comparable sales positive at all of its four brands.
In contrast to last year’s operating loss of $10m, the operating income in this quarter was reported at $205m. Similarly, the net income increased to $158m from a net loss of $18m last year.
GAP president and CEO Richard Dickson shared the company gained market share for the fifth consecutive quarter with positive comparable sales at all brands. He believes this demonstrates improved relevance with customers as GAP executes against its brand reinvigoration playbook.
Dickson said: “We are on a journey to become a high-performing house of iconic American brands that shape culture. While this will take time, perseverance, and rigour, we are excited about the opportunities ahead as we unlock the power of Gap Inc.”
He also shared the company has risen both its sales and operating income guidance for the full year.
American Eagle Outfitters reports record Q1 revenue
American Eagle Outfitters saw record revenue of $1.1bn in Q1 2024, up 6% on the prior year and an operating profit of $78m, which exceeded its guidance. The company’s womenswear brand Aerie also achieved record Q1 results, with comparable revenue up 6%.
CEO and executive chairman Jay Schottenstein welcomed the “strong” results which he said demonstrated the company’s profitable growth strategy was paying off.
He added: “We continued to offer exciting merchandise collections and customer activations, providing compelling in-store and digital shopping experiences. This, combined with actions to optimise our operations and drive efficiencies across the organisation, contributed to meaningful profit expansion, which was ahead of expectations.”
American Eagle Outfitters expects 2024 to see an increase in revenue between 2% and 4% overall and revenue growth in the high-single digits in Q2.
Dick’s Sporting Goods gains market share after strong Q1
Dick’s Sporting Goods reported a 6.2% increase in its net sales of $3.02bn for the 13 weeks ended 4 May 2024 (Q1). It also revealed a double-digit EBT margin of 11.3%.
Net income was $275m compared to $305m in the same period the year before which was a drop of 10%.
President and CEO Lauren Hobart said: “We are incredibly proud of our first quarter results. With our comps increasing 5.3% and double-digit EBT margin of over 11%, we drove continued momentum in our business. Our core strategies and execution are delivering strong results, and we are continuing to gain market share as consumers prioritise Dick’s Sporting Goods to meet their needs. Because of our strong Q1 performance, our expectations for continued robust demand from athletes and the confidence we have in our business, we are raising our full year
outlook.”
The company’s FY outlook for 2024 is between $13.1bn and £13.2bn with comparable sales growth of 2.0% to 3.0%.
Abercrombie & Fitch ups FY outlook after record Q1
Abercrombie & Fitch’s Q1 net sales for 13 weeks ended 4 May 2024 were up 22% from the same period the year before to $1bn, which is described as the highest Q1 net sales result in the company’s history.
Operating income was $130m compared to an operating income in the same period the year before of $34m or $38m on a reported and adjusted non-GAAP basis.
Net income was $115.1m compared to $17.8m in the same period the year before.
The company’s CEO Fran Horowitz said: “Our outstanding first quarter results reflect the power of our brands and strong execution of our global playbook. We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, driving sales above our expectations.
“Growth was broad-based across regions and brands with Abercrombie brands registering 31% growth and Hollister brands delivering growth of 12%. Strong top-line growth, along with gross profit rate expansion, led to record first quarter operating income and an operating margin of 12.7%.”
Abercrombie & Fitch has increased its outlook for fiscal 2024 to net sales being up around 10% from $4.3bn in fiscal 2023. This is an increase to the previous outlook of growth in the range of 4% to 6%.
TJX Q1 6% sales increase driven by consumer demand
Net sales for TJX Companies (TJX) first quarter (Q1) of fiscal 2025 was $12.5bn, an increase of 6% compared to the same quarter last year.
The company’s income before taxes was recorded at $1.4bn compared to last year’s $1.21bn. Net income increased 22% to $1.1bn from $891m in the previous year.
Ernie Herrman, CEO and president of The TJX Companies Inc. stated: “Overall comp store sales increased 3%, at the high-end of our plan, and both profitability and earnings per share were well above our expectations. Our teams across the company executed on our initiatives and were laser-focused on delivering consumers exciting values on great brands and fashions and a treasure-hunt shopping experience, every day.
“We saw comp sales growth at every division entirely driven by customer transactions, which underscores the strength of our value proposition. This also gives us confidence in our ability to gain market share across all of our geographies. The second quarter is off to a good start and we see numerous opportunities for our business for the balance of the year that we plan to pursue. Longer term, we are excited about the potential we see to drive customer transactions and sales, capture additional market share, and increase the profitability of TJX.”
Ralph Lauren Q4 revenue up 2% as strategy for growth delivers
In the fourth quarter (Q4) of fiscal 2024, revenue increased 2% from $1.54bn to $1.57bn on a reported basis and was up 3% in constant currency.
Ralph Lauren explained foreign currency negatively impacted revenue growth by approximately 110 basis points in the quarter. However, a shift in the timing of this year’s Easter holiday benefited revenue growth by approximately 50 basis points.
Operating income increased from $40.2m to $108m. Similarly, net income grew to $91m from last year’s $32.3m.
Global direct-to-consumer comparable store sales increased 6%, driven by continued brand elevation with double-digit growth in Average Unit Retail (AUR) and full-price retail performance.
Patrice Louvet, president and chief executive officer, said: “Our teams delivered continued progress on our strategic and financial commitments in year two of our Next Great Chapter: Accelerate plan. Supported by our increasing brand desirability and multiple engines of growth, this year’s performance underscores the strength of our long-term strategy, even as we navigate a highly dynamic global operating environment.”
For fiscal 2025, Louvet shared that Ralph Lauren will “stay on offence” by continuing to invest in its brand, core products portfolio and consumer-centric ecosystems in key global cities. He believes this strategy, combined with operational discipline and the team’s agility and dedication, will drive sustainable growth and value creation.
Deckers’ strong Q4 driven by Hoka, Ugg brands
Net sales increased 21.2% from $792m to $960m and both direct-to-consumer (DTC) and wholesale saw revenues increase by approximately 21%.
Operating income went up from $106m to $144.3m. While the income from operations rose to $144.3m compared to last year’s $105.9m. Net income increased from $91.8m to $127.5m.
Deckers’ brands Hoka and Ugg stood out to be revenue drivers, as the president and CEO, Dave Powers shared: “Hoka and Ugg remain two of the most admired and well-positioned brands in the marketplace, each with a robust innovation product pipeline designed to win with global consumers. Looking forward, our talented teams are highly motivated to continue driving towards the long-term opportunities of these iconic brands.”
Chief financial officer Steve Fasching explains the results demonstrate the demand for Deckers’ brands and the strength of its nimble operating model which he said is delivering an industry-leading financial performance.
Urban Outfitters delivers record $1.2bn revenue in Q1
For the first quarter ending 30 April 2024, Urban Outfitters’ total company net sales increased 7.8% to a “record” $1.2bn. Both retail and wholesale segments saw revenues go up by 5.8% and 3.4%, respectively.
Income from operations increased from $71.4m to $74.6m, while, net income reported a jump to $61.8m from last year’s $52.8m.
CEO Richard A. Hayne said the continued strength of Anthropologie, Free People, FP Movement and Nuuly brands drove the “record” first-quarter sales and earnings.
He added: “Customer demand remains robust for our spring and summer fashion, which bodes well for continued sales growth in Q2.”
Target Q1 meets expectations with return to growth expected in Q2
The total revenue in the first quarter of 2024 fell 3.1% from $25.32bn to $24.53bn. Operating income saw a similar downward trend and decreased 2.4% to $1.3bn, while net earnings fell by 0.8% from $950m to $942m compared to the same period last year.
Brian Cornell, chair and chief executive of Target Corporation said the first quarter financial performance was in line with the company’s expectations on both the top and bottom line.
He stated: “Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfilment services. Consumers continue to respond to the newness and value that we offer across our shopping experience, and we’re pleased with early results from the relaunch of Target Circle.”
Moving forward, Target said it hopes to deliver for its guests through lower prices, a seasonally relevant assortment, ease and convenience, as it continues to invest in the strategy and efficiency initiatives to get back to growth and deliver on longer-term financial goals.
Delta Galil sees 2% hike in Q1 revenue on strength of brand offer
Delta Galil reported first-quarter 2024 sales of $450.8m, a 2% increase from $442.5m in the first quarter of 2023, driven by growth across most of the company’s segments.
Operating income increased by 80% to $26m compared to $14.4m in the prior-year period. This was attributed to higher sales and gross margin, partially offset by higher SG&A expenses.
Net income increased 300% from $3m to $12m compared to the same period last year. Net income, excluding non-core items, net of tax, increased by 86% to $14.5m.
Isaac Dabah, CEO of Delta Galil, said: “Delta’s solid first-quarter results demonstrate the strength of our brands, the remarkable value and offerings we provide to our Private Label partners, and the successful implementation of the strategies we are pursuing to deliver strong revenue and earnings growth.
“Our performance during the first quarter is especially encouraging as we returned to year-over-year growth in sales with strong profitability and record first quarter operating cash flow. This is testament to the hard work and dedication of our global teams, and the success of recent initiatives aimed at driving sales, improving operating efficiencies and realigning our manufacturing capabilities.”
He also shared that during the first quarter, Delta Galil completed the acquisition of Passionata, which he explained adds a complementary intimate brand with a strong global and millennial following to its portfolio.
Amer Sports’ Q1 revenue up 13% on technical apparel segment
Amer Sports’ first-quarter (Q1) revenue was up 13% to $1.2bn compared to the first quarter of 2023 thanks to a 44% increase in its technical apparel segment.
Amer Sports attributed the growth in technical apparel to Arc’teryx, which it said is generating double-digit new store growth while also delivering exceptional omni-comp growth against difficult comparisons from the first quarter of 2023.
Operating profit was $109m which is lower than last year’s $130.4m. Net income was also lower at $6.9m as opposed to $19m in the previous year’s first quarter.
CEO James Zheng said: “Our transformation to a brand-direct business model four years ago continues to fuel profitable growth today, and our high-performance technical products are resonating with consumers globally. We are gaining share in the premium sports and outdoor market and are well-positioned to deliver another great year in 2024.”
Macy’s positive for return to growth despite Q1 sales drop
Net sales were down 2.7% to $4.8bn at Macy’s compared to the first quarter of 2023.
Operating income also fell 2.5% from $244m to $125m, while, net income was $62m compared to last year’s $155m.
However, Tony Spring, chairman and chief executive officer of Macy’s Inc., said sales neared the high end of its outlook thanks to the company’s Bold New Chapter strategy which he believes was well received by its customers.
He said: “Although early days, our investments in product, presentation and experience are gaining traction and reinforce our belief that longer-term, Macy’s, Inc. can return to sustainable, profitable growth.”
Macy’s updated its annual sales and earnings outlook to reflect a portion of first-quarter performance along with the dynamic macro environment.
The company shared that it continues to view 2024 as a transition and investment year, reflecting investments in key customer-focused strategic initiatives, supported by the company’s “strong” balance sheet.
Hanesbrands losses widen in Q1 on sales slump
First quarter losses widened and net sales sank at Hanesbrands Inc on the back of charges linked to the divestment of its US Sheer Hosiery business.
Net loss grew to $39.1m from $34.4m a year earlier. Operating income fell to $52.1m from $57.3m while net sales declined 16.8% to $1.16bn.
On an organic constant currency basis, net sales decreased approximately 15% compared to last year.
Global Champion brand sales decreased 26% on a reported basis and 25% on a constant currency basis, with approximately 500 basis points of the decrease due to the planned strategic shift of its Champion kids’ business to a license model at the beginning of 2024.
US sales decreased 35%. Internationally, sales decreased 17% on a reported basis and 16% on a constant currency basis. Constant currency sales increased in Japan, China and Latin America, which were more than offset by decreases in Europe and Australia as macroeconomic headwinds continued to impact demand in these regions.
“We delivered solid first-quarter results with sales at the midpoint of our outlook, better-than-expected adjusted operating profit, positive cash flow generation and further reduction of our leverage. With the year unfolding as anticipated and our profit visibility, we reiterated our outlook for the full-year,” said Steve Bratspies, CEO.
“Over the past three years, we’ve taken necessary actions across the business to enhance and strengthen both the operating and financial models of the Company.
“With our leading brand positions, lower fixed-cost structure, reestablished gross margin, consistent cash generation and a commitment to reduce debt, we have created a multi-year flywheel designed to accelerate earnings, deleverage faster, and invest in growth initiatives, which we believe will drive strong shareholder returns over the next several years.”
GEOX Q1 sales sink on wholesale weakness
Sales at GEOX fell 13.5% in the first three months of the year to EUR193.6m on the back of weakness in the wholesale channel. Net financial loss was EUR134.9 versus a loss of EUR93.1m a year earlier.
Chief Executive Officer Enrico Mistron commented: “The first quarter of 2024 has proven to be extremely challenging and complex as highlighted by numerous market indicators already emerged towards the end of last year. Nevertheless, there are positive signals regarding the performance of our direct-to-consumer (DOS) channels. Comparable sales (LFL) from physical DOS confirm positive trend, reflecting the impact of investments in product and positioning towards a premium segment. The persistence of the complexity and uncertainty observed in all our major reference markets in these first months of 2024 lead us to maintain a prudent and focused approach to the growth of the most profitable markets, the streamlining of processes, and the optimization of cost structures.”
Under Armour moves to restructure on Q4 profit, sales slip
Under Armour’s fourth-quarter sales fell 5% to $1.3bn. North America revenue decreased 10% to $772m, and international revenue increased 7% to $561m (up 6 percent currency neutral). Wholesale revenue decreased 7% to $850 million, and direct-to-consumer revenue was flat at $455m.
Apparel revenue decreased 1 percent to $877m. Footwear revenue was down 11 percent to $338m. Accessories revenue was down 7% to $89m.
The sportswear brand swung to an operating loss for the three months ending 31 March with an operating loss of $3.6m from a $29.5m operating profit and a net profit of $6.6m from $170.5m a year earlier.
The group is now embarking on a restructuring plan which will include job cuts.
CEO Kevin Plank said: “Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term,” Plank continued. “Over the next 18 months, there is a significant opportunity to reconstitute Under Armour’s brand strength through achieving more, by doing less and focusing on our core fundamentals: driving demand through better products and storytelling, running smarter plays like simplifying our operating model and elevating our consumer experience. In parallel, we’re focused on cost management and implementing the strategies necessary to grow our brand and improve shareholder value as we move forward.”
Boot Barn’s Q4 sales decrease amid cautious consumer spending
Net sales for the fourth quarter decreased 8.7% over the prior-year period to $388.5m from $425.7m.
This decline was attributed to the decrease in consolidated same-store sales and the impact of a 13-week quarter when compared to a 14-week quarter in the prior-year period, partially offset by the incremental sales from new stores opened over the past 12 months.
Income from operations decreased $24.5m to $38.2m in the prior-year period. While net income fell to $29.4m from the prior period’s $46.4m.
President and chief executive officer Jim Conroy believes the company will continue to experience further improvement going forward.
He said: “In fact, we have seen broad-based sequential improvement across virtually all major merchandise departments, both stores and e-commerce channels and in all four regional geographies. This trajectory began as we progressed from our third quarter into the fourth quarter, then improved in April and again into May where we have seen positive same-store sales in both channels on a month-to-date basis.”
Despite this optimism, Conroy predicts consumers will remain cautious for the foreseeable future. Nonetheless, he is confident that Boot Barn is well positioned to further execute its long-term strategic initiatives.
Crocs Inc Q1 profit dips on HEYDUDE challenges
First quarter revenues increased to $938.6m from $884.2m a year earlier. Operating income fell to 226.4m from $234.9m a year earlier on the back of increased cost of goods and higher expenses in the comparative period. Net income increased to $152.5m from $149.5m.
“We delivered an exceptional first quarter, led by mid-teens growth of our Crocs Brand, driven by robust consumer demand both in North America and in international markets,” said CEO Andrew Rees. “Our record revenue, industry-leading gross margins and the power of our diversified business enabled us to raise our full-year adjusted diluted earnings per share outlook.”
Rees continued: “As we continue to prioritise brand health in the North American market for HEYDUDE, and considering what we are seeing quarter-to-date, we are reducing our revenue expectations for the brand for the balance of the year. We are confident in the long-term opportunity for the HEYDUDE brand and are excited to welcome a new HEYDUDE president to fully unlock its future potential.”
Wolverine Worldwide swings to loss in Q1
Total revenue in the quarter ending 30 March 2024 fell to $394.9m from $599.4m.
The company reported an operating loss of $3.1m compared with an operating profit of $45.3m a year earlier. Net losses were $13.7m from an $18m profit a year earlier.
The company reported lower gross profit and booked an impairment charge compared with the same period a year earlier. During 2023, Wolverine Worldwide divested the US Wolverine Leathers business, the non-US Wolverine Leathers business and the Sperry brand.
“We delivered better-than-expected revenue and earnings in the first quarter, and we are beginning to see proof points emerge as early validation of our strategy and execution – including record gross margin in the quarter, acceleration in our direct-to-consumer business, improving order trends across our wholesale operations, and a healthier balance sheet,” said Chris Hufnagel, president and CEO of Wolverine Worldwide.
“We’re executing our turnaround and transformation with pace and continue to make meaningful progress towards realising the full potential of our brands, platforms, and teams. While we have more work to do, I’m encouraged by the great work of our teams and the power of our brand-building model – focused squarely on creating awesome products, telling amazing stories, and driving the business each and every day.”
Q2 losses widen, sales sink at Delta Apparel
Delta Apparel booked net sales of $78.9m compared to the prior year period net sales of $110.3m with sales falling in both the Salt Life Group and the Delta Group segments for the second quarter ending 30 March. Gross margins were 4.3% compared to 14.7% in the prior year period, driven primarily by production curtailments in the Delta Group segment.
Operating loss increased from $5.3m in the prior year period to $24.4m.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was a loss of $20.9m. Net loss increased to $36.3m from a net loss of $7m.
