Prachi Singh

|

Friday, September 22 2017

Guess has released its second sustainability report highlighting the company's development towards a higher standard for social and environmental performance. This year, Guess assessed the water footprint of its denim, and mapped its denim production by global water availability, as an important first step to better manage its impacts. The company is currently working on a comprehensive water action management plan to address these impacts that will be released next year.

"Through my experience leading this truly global company, I see one constant across borders: people, particularly the younger generation, are deeply concerned about the future of this planet," said Victor Herrero, Chief Executive Officer, Guess in a statement, adding, "At Guess, we understand that we must continue to grow and contribute to the global community with increasing care for people and the environment; we aim to embrace existing solutions as well as try new ones to address the social and environmental challenges of our time."

Guess releases its second sustainability report

Since the release of its first sustainability report in 2015, the brand has developed its first formal sustainability strategy and commitments, and established new goals and initiatives that will play a large role in the future business of Guess. The company added that these goals will motivate the company's efforts over the next five years to enhance the sustainability of both its global operations and local communities, and connect customers with more sustainable fashion choices.

The company said, as a member of the Global Reporting Initiative's Standards Pioneers Program, Guess is one of the first organizations to implement GRI's rigorous international sustainability reporting standards. Guess has also joined a global industry pledge to advance a circular fashion system – the idea that fashion should last, and be continuously repurposed, reused and recycled. The company will also be announcing a product take back program later this year.

The report also updates other areas of progress, including successfully reducing its carbon footprint across its stores, distribution centers and headquarters in Los Angeles, California. In FY 2015, Guess reported its efforts to improve store energy efficiency by replacing existing lighting systems with more efficient LED lighting. As part of the company’s recent commitment to the science based target initiative, the company will also be transitioning its current emission reduction goal to create more aggressive carbon emission reduction goals within the next two years as its contribution to help limit global warming.

Pictures:Guess website

Angela Gonzalez-Rodriguez

|

Thursday, September 21 2017

ANALYSISThe Spanish textile giant grew 11.5 percent in the first half of 2017, closing the first semester of its fiscal year with 11.671 million euros. The results of the as Zara or Massimo Dutti parent group have accused "the strong appreciation of the euro against most currencies".

Profit has also taken a hit, closing the period at 1,366 million euros, which includes an increase of 9 percent over a year earlier. Inditex has therefore presented a profit slightly below market forecasts for the period comprehended between February,1 to July, 31 July.

Comparable sales have been the biggest blow, growing 6 percent in the first six months of the year, almost half of the 11 percent growth recorded in the same period last year.

The euro’s appreciation weights Inditex’s H1 results

The company's profit rose 9 percent to 1,366 million euros. The currency effect has meant a considerable slowdown for the world’s largest fashion retailer’s profit growth, which came in at 18 percent more.

Thus, although Inditex's revenues in the semester improved by 11.5 percent over the same period in 2016, this rate reflected a decline from the 14 percent that increased in the first quarter. The reason? The rally of the European currency, which accumulates increases of 14 percent against the dollar so far this year and more than 4 percent against the pound.

Bankinter experts precisely call out the deceleration of comparable sales for the textile giant, saying that "Although the results of the first half of the year have been presented in line with the estimated, the slowdown in comparable sales (up 6 percent in the first semester compared to 10 percent in 2016 and 11 percent in the first half of 2016) and the narrowing of the gross margin (54.8 percent compared to 58.2 percent in the first quarter and 55.7 percent of the second quarter of 2016) are the most worrisome aspects.”

"The negative impact of the euro appreciation on sales was an expected effect but we preliminarily believe that the impact suffered is not only justified by this," they added.

Analysts at Morgan Stanley cut target price for Inditex from 38 to 30 euros

Meanwhile, Morgan Stanley’s analysts have cut their valuation on Inditex stock by 21 percent, recommending to pay 30 euros per share - previously held a target price of 38 euros per share.

Following the financial release and various analysts’ commentary, Inditex shares fell on Wednesday, closing down 0.84 percent to 32.41 euros. However, the company’s shares have kept a positive balance of 0.92 percent so far this year, according to the Spanish financial newspaper 'Expansion'. At the close of trading Wednesday, the market capitalisation of the textile giant is slightly above 101,000 million euros.

The graph shows Inditex financial performance in H1FY17 by revenue and net income. All in euros.

Image:Zara, Official Web

Prachi Singh

|

Wednesday, September 20 2017

Inditex Group said that revenue rose by 11.5 percent in the first half of 2017 to 11.7 billion euros (14 billion dollars), underpinned by growth across all markets and brands. First-half net profit amounted to 1.37 billion dollars, a year-on-year growth of 9 percent, while like-for-like sales growth was 6 percent. The company added that between August 1 and September 17, 2017, sales in local currencies in stores and online have increased 12 percent. The company will pay a final ordinary and bonus dividend of 0.34 euro (0.41 dollars) per share, completing the 0.68 euros (0.82 dollar) per share dividend declared against 2016 earnings.

Commenting on the group’s performance, Inditex´s Chairman and CEO, Pablo Isla, said in a statement, "Strength and sustainability of the company´s integrated offline-online store model, which year after year continues to demonstrate its ability to deliver growth, while emphasising the creation of value for society and the environment, as evidenced by the notable creation of jobs, particularly in Spain, thanks to the headquarters effect".

Retail expansion and job creation continues at Inditex

The group also continued to generate jobs and created 11,043 new positions in the last 12 months. Of these, 2,933 jobs are located in Spain, resulting from growing teams at the headquarters.

All of the group’s brands expanded their international footprint, adding stores in 35 countries, so the group’s global store count rose to 7,405, 113 more than at the start of the year. Following the introduction of seven of the group’s retail concepts in Belarus in August, and with the www.zara.com platform scheduled to launch in India on October 4, the group now operates in 94 markets, 46 of which have an online presence.

The company said, in June, work began on the construction of a new logistics centre in A Laracha (Galicia, Spain), and in September construction started on the logistics hub planned for Lelystad (Netherlands), which will complement and support the existing central logistics platforms in Spain. The group continued to roll out its used clothing collection programme in collaboration with a number of international NGOs in 532 stores in seven countries including Spain, Portugal, the UK, Ireland, Netherlands, Denmark and China. The company aims to implement the scheme in another 25 countries including Sweden (one store in Stockholm) and Austria (one store in Vienna).

During the first six months of the year, all of the Inditex´s brands moved forward with the group strategy of expanding, perfecting and refreshing the integrated offline-online store model. Zara opened flagship stores in Mumbai (India) during the second quarter, Castellana 79, located in one of Madrid’s (Spain) busiest shopping hubs and Silk Way shopping centre in Astana (Kazakhstan). Pull&Bear, meanwhile, opened its first flagship store in Paris (France) in May, on Rue de Rivoli and Bershka relocated its central Paris flagship store to Rue de Rivoli.

In June, all the group’s brands (Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe) opened stores in the Puerto Cancún shopping centre in Quintana Roo (Mexico).

Picture:Massimo Dutti website

Angela Gonzalez-Rodriguez

|

Sunday, September 17 2017

The U.S. footwear company has filed for Chapter 11 seeking for bankruptcy protection and aiming to gain some time to implement operational and financial restructuring.

Aerosoles announced last week it had voluntarily filed petitions to reorganize under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The filing is dated on September, 15 and indicates that the footwear retailer will continue to manage its stores and operate its businesses as "debtors in possession" under the jurisdiction of the Bankruptcy Court.

Sources close to the matter explain that this “reorganization” enables the implementation of the company's strategic plan to revitalize the brand and focus on growing the e-commerce, wholesale and international channels.

Aerosoles toclose 74 stores and focus on online and flagship stores

Following the filing, the retail group will close up to 74 of its stores. Aerosoles plans however to maintain four flagship stores in New York and New Jersey. “Customers may also continue to shop online, as the company continues to enhance its strong digital platform, and at leading retailers throughout North America,” added the shoe label in a statement.

Denise Incandela, the Company's Interim Chief Executive Officer, commented the reasons that have led company to make such a difficult decision: "For nearly 30 years, Aerosoles has proudly offered consumers stylish and comfortable footwear at a great value. This restructuring will enable Aerosoles to become a stronger, more vibrant brand, and position the Company for future growth."

"Incandela added that "by improving our financial structure and right-sizing our retail footprint, we will be able to refocus our business efforts on the execution of our turnaround strategy. We will continue to create product that leads the market in comfort and fashion, grow our ecommerce, wholesale and international businesses, and promote innovative new marketing campaigns that will drive our business forward."

The company expects to complete the restructuring within approximately four months. After such an overhaul, The reorganized business will focus its efforts on the ecommerce, wholesale and international businesses that have continued to gain strength in recent years.

"We sincerely appreciate the tremendous efforts of our employees and our partners as we work through the restructuring. We recognize that our success is dependent on the ongoing support of our employees and value the collective efforts of our field and corporate team members. We also appreciate the loyalty and support of our customers. This process will allow us to emerge as a stronger brand and company and reinforces our commitment to providing a superior shopping experience in stores and online," said Incandela.

Aerosoles' legal advisor in connection with the restructuring is Ropes & Gray LLP. Berkeley Research Group, LLC serves as its restructuring advisor and Piper Jaffray & Co. serves as its investment banker for the restructuring. Hilco Merchant Resources is assisting on store closings.

Image:Aerosoles, Collection A/W2017

Angela Gonzalez-Rodriguez

|

Sunday, September 17 2017

ANALYSISThe iconic U.S. apparel group has come to terms with the fact that, in order to prevail in an ever-challenging environment, it needs to shift the focus from namesake brand and upper scale Banana Republic to a more affordable Old Navy and trendy athleisure flagship label Athleta.

Earlier this week, the Californian group announced it will be shifting its strategy to focus on its two "growth brands" — family-oriented Old Navy and its Athleta’s sportswear lines.

The decision goes back to earlier this year when Gap Inc. Chief Executive Officer Art Peck evaluated the extensive chain's network, reaching the conclusion that hundreds of them were “terminally ill.” Gap and Banana Republic locations were the worst affected, languishing with same-store sales that have fallen 13 of the past 14 quarters at its namesake chain, and they've tumbled the past 10 straight quarters at Banana Republic, recalls ‘Business Insider’.

Gap Inc to close 200 Gap and Banana Republic stores to shift focus on Old Navy

In an attempt to accelerate the group’s turnaround, Peck will close about 200 Gap and Banana Republic stores and refocus on Old Navy and Athleta brands. To this point, Gap’s CEO Art Peck said last week the company expects net sales at Old Navy to exceed 10 billion dollars, with Athleta’s sales topping 1 billion dollars during the next "few years."

We're certainly not giving up on Gap or Banana, but we're acknowledging the world continues to change," Peck, 62, said in a recent interview. "And those are the two most mature brands in the portfolio."

Old Navy makes three-fourths of Gap Inc’s profits

This move has been very much anticipated by the market, as Old Navy has been the company's biggest division for the past three fiscal years, and it's estimated to account for about a third of the corporate parent's value. Additionally, Old Navy is contributing about three-fourths of the group’s total profits. With that growth, noted Jefferies’ analyst Randal Konik, Old Navy is well on its way to hitting 80 percent of earnings in a few years.

Konik has been one of the first analysts to comment on this decision, sustaining that Wall Street largely underestimates Gap's growth potential. Furthermore, he claims that Old Navy offers enough of a reason to bet big on the apparel retailer. In fact, Jefferies has named Gap one of its top "Franchise Picks," recommending to buy the stock at a target price of 39 dollars per share, up from previous 35 dollars.

"Old Navy continues to exhibit positive data results from our webscrapes," explained Konik in a note to market last week. "This makes us incrementally more confident about top-line trends. We believe this data, coupled with our store checks, suggests continued momentum for Old Navy ahead."

Athetica is growing its market share at fast pace

Meantime, Athleta is gaining a larger share of the athletic apparel market, Konik said, applauding Gap's push in this separate division. Peers in the athletic space include Lululemon, Nike and Adidas.

Konik added that Old Navy's fleet of stores is especially appealing since they're typically detached from malls. In Athleta, Konik expects the brand to continue to be a "share gainer in an attractive athletic apparel category."

Photo:Old Navy Web