Fashion and Luxury Industry Consolidates Recovery in 2011, but 2012 Starts Slowly
Fiscal year 2011 confirmed the good health of the fashion and luxury industry, showing a growth in sales slightly higher than the previous year (12.1% vs. 11.7%), according to the "Fashion and Luxury Insight", the annual report by SDA Bocconi and Altagamma monitoring balance sheets of listed international companies with sales in excess of € 200 million.
The industry profitability is stabilizing, the report, which this year has analyzed a sample of 77 companies, highlights: the average ROI is 13%, only slightly lower than 2010's 13.4%, even ifbelow the pre-crisis levels, EBITDA margin is 14.1% (14.3% in 2010) and the ratio of working capital on sales is 18.8% (18.4% in 2010). The most conspicuous change is in ROE, which raises to a record 27.7% (18.6% in 2010), exceeding even the pre-crisis levels, as a consequence of a large increase in financial leverage, with gearing passing from 0.47 in 2010 to 0.76 in 2011.
"The preliminary 2012 financial data cast a shadow on the picture", SDA Bocconi's Paola Varacca Capello, co-author of the report, says. "We have data for 53 out of 77 companies and they are not very good: growth markedly slows from 12.1% to 7.8% and profitability suffers, as shown by the EBIT margin, which passes from 10.1% to 9.6%".
"Company size remains a crucial driver of profitability", Emilia Merlotti from SDA Bocconi, co-author of the report, says. "The largest companies, with sales above € 5 billion, outperform the rest both in terms of ROI and EBIT margin. On the other end, they record the lowest growth rates".
As a whole, Jewels and watches and Apparel emerge as the best performing clusters of the year, with both growth rates and ROI above average.
"High-end is by far the most thriving segment", Armando Branchini, secretary general of Fondazione Altagamma and co-author of the report, says. "In Apparel, for instance, companies have a 27.7% sales growth rate and a 19.8% ROI, against 11.9% and 14.7% in the medium segment and 16.6% and 10.5% in the mass market".
INDUSTRY FINANCIAL HIGHLIGHTS
Parameter | Average |
Sales Growth | 12.1% |
Return on Investments (Roi) | 13% |
Return on Equity (Roe) | 27.7% |
EBIT Margin | 10.7% |
Asset Turnover | 1.26 |
EBITDA Margin | 14.1% |
Net Cash Flow to Sales | 8.1% |
Gearing | 0.76 |
Current ratio | 2.34 |
Intangible Assets Weight | 24.1% |
Fixed Assets Weight | 43.8% |
Working Capital to Sales | 18.8% |
Trade Debtor Days | 40.77 |
Core Investments on Depreciation | 145.5% |
Total Investments on Sales | 4.6% |
Source: Fashion&Luxury Insight, FY 2011
TOP TEN BY SALES GROWTH
Company | Country | Cluster | Sales Growth |
Michael Kors | Usa | Apparel | 62% |
Lululemon | Can | Active | 41% |
Deckers Outdoor | Usa | Leather Goods | 38% |
Gildan Activewear | Can | Active | 32% |
Inter Parfums | Fra | Beauty | 30% |
Samsonite | Eu | Leather Goods | 29% |
Richemont | Eu | Jewels / Watches | 29% |
Genesco | Usa | Leather Goods | 28% |
Phillips Van Heusen |
Usa | Apparel | 27% |
Salvatore Ferragamo |
Ita | Leather Goods |
27% |
Source: Fashion&Luxury Insight, FY 2011
TOP TEN BY ROI
Company | Country | Cluster | ROI |
Coach | Usa | Leather Goods | 50% |
Lululemon |
Can | Active | 39% |
Michael Kors |
Usa | Apparel | 37% |
Hennes & Mauritz |
Eu | Fashion Retail | 34% |
Next | Uk | Fashion retail | 32% |
Fossil | Usa | Jewels / Watches | 29% |
Hermes | Fra | Leather Goods | 27% |
Deckers outdoor |
Usa | Leather Goods | 25% |
Gerry Weber |
Eu | Apparel | 24% |
Burberry |
Uk | Apparel | 23% |
Salvatore Ferragamo | Ita | Leather Goods | 23% |
Inditex | Eu | Fashion Retail | 23% |
Source: Fashion&Luxury Insight, FY 2011
TOP TEN BY EBIT
Company | Country | Cluster | EBIT |
Coach | Usa | Leather Goods | 31% |
Hermes | Fra | Leather Goods | 31% |
Lululemon | Can | Active | 29% |
Ports Design Limited |
Asia | Apparel | 29% |
Prada | Ita | Leather Goods | 25% |
Swatch | Eu | Jewels / Watches | 24% |
Richemont | Eu | Jewels / Watches | 23% |
Tod's | Ita | Leather Goods | 22% |
Dior | Fra | Financial Conglomerate | 21% |
Deckers outdoor |
Usa | Leather Goods | 21% |
Source: Fashion&Luxury Insight, FY 2011
TOP TEN BY CASH GENERATION
Company | Country | Cluster | Cash Flow to Sales |
Hermes | Fra | Leather Goods | 24% |
Coach | Usa | Leather Goods | 22% |
Prada | Ita | Leather Goods | 22% |
Ports Design Limited |
Asia | Apparel | 21% |
Inditex | Eu | Fashion Retail | 19% |
Lululemon |
Can | Active | 18% |
Burberry | Uk | Apparel | 18% |
Revlon | Usa | Beauty | 16% |
Movado / Tod's | Usa | Jewels / Watches | 15% |
Tod's | Ita | Leather Goods | 15% |
Next | Uk | Fashion Retail | 15% |
Hennes & Mauritz | Eu | Fashion Retail | 15% |
Fonte: Fashion&Luxury Insight, FY 2011