H&M: Q1 margin trajectory more appealing than sales trends

Q1 2024 results unveiled yesterday by H&M showed impressive profit momentum, while March sales (+2% FX-n) improved sequentially vs. Q1 (-2% FX-n), albeit well below the pace of growth at Inditex. Although we increase our FY24 estimates by 5% following these stronger-than-expected Q1 profits, we

On the shelves now: Consumer Weekly #21

In this Consumer Weekly newsletter, we provide a brief overview of the key factors affecting our Consumer coverage, from Luxury & Consumer goods to Retail & E-commerce and Food & Ingredients. This week, we look at the expected growth recovery among e-commerce players and the necessary b

On the shelves now: Consumer Weekly #15

In this Consumer Weekly newsletter, we provide a brief overview of the key factors affecting our Consumer coverage from Luxury & Consumer goods, to Retail & E-commerce and Food & Ingredients. This week, we take a look at the latest economic data on US consumers as we think they could pr

H&M: margin upturn slow to materialise

The change in CEO announced yesterday clearly took the spotlight over weaker-than-expected Q4 results. H&M is also experiencing a tougher start to Q1 relative to Inditex and Primark given the sales decline of 4% FX-n between 1st December and 28th January, as well as a markdown impact of 100bp e

Red Sea tensions: looming risk of a new wave of inflation

In our first note last month "Will Red Sea tensions disrupt our groups' supply chains?" we discussed why the first attacks on commercial shipping routes were unlikely to cause major supply chain disruption for our companies, provided they did not last too long. However, since then, the attacks have

Nike cuts H2 sales outlook on weaker demand and increased macro headwi...

Following signs of a more cautious consumer spending and promotional environment, especially in EMEA and China, Nike has taken the strategic decision to reduce supply within the marketplace, thus prompting the sales warning on H2 FY24. Management expects to offset this softer sales growth with a co

Will Red Sea tensions disrupt supply chain of our groups?

Following several attacks on commercial shipping since mid-November, seven of the largest shipping firms announced they would redirect their container ships from the Red Sea and the Suez Canal and switch to a safer route around Africa. This traffic rerouting implies additional costs and delays when

Fashion: consumers (slowly) reappear as autumn arrives

Due to changing weather conditions and unpredictable consumer demand, fashion markets proved to be quite volatile between September and November, with soft numbers achieved in some European markets relative to the US during Black Friday. As the black clouds lingering over fashion are not set to cle

All eyes on margin improvement potential

Disappointing current trading was obviously overshadowed by the Q3 EBIT beat (+4% vs. CSS), highlighting strong execution in cost management and the ramp-up of the cost & efficiency programme. While this healthy performance lends credibility to the FY24 EBIT margin target of 10%, H&M needs

Fashion: Only when the tide goes out do you discover... who the winner...

One of Warren Buffet's famous quotes has never been truer for fashion groups that have been dealing with low tides over recent years: Covid-related lockdowns, supply chain disruption, excess inventory, promotional activity and volatile consumer sentiment. Unsurprisingly, Inditex is successfully wea

The shine is coming off Shein

Last week, Chinese online platform Shein was able to raise USD2bn in its latest fundraising, implying a one-third cut in the company's valuation from USD100bn a year earlier following a combined series of challenges: (i) reduced investor appetite for Consumer-Tech companies, (ii) growing competitio

Temu coming to Europe with value/young customers in sight

With Pinduoduo's subsidiary Temu coming to Europe and likely to be as successful as it was in the US in recent months, it is about to become equally important as Shein, Wish and Aliexpress. Value players in fashion/electronics/decoration with low price points and young customers are at risk, but ou

Bryan, Garnier & Co Consumer Daily | Fashion, Interparfums, L'Oréal

Fashion groups about to overcome inventory overhang at the expense of ...

Excess stock has been a pain-point for the fashion and sportswear industries over the past year. Although recent publications showed that most groups have made good progress in reducing inventory, steeper discounts have negatively impacted margins. Whereas Inditex is generally quite immune to inten

Play margin rebound potential

Weak current trading (March sales up 4% FX-n) has clearly not dampened the enthusiasm of investors who welcomed positively: (i) the resilient GM performance, (ii) inventory optimisation with a stable markdown impact YoY, and (iii) margin headwinds gradually easing off. Whereas top-line trends clear

Bryan, Garnier & Co Consumer Daily | H&M

Bryan, Garnier & Co Consumer Daily | CLARANOVA, H&M

Bryan, Garnier & Co Consumer Daily | Inditex, H&M