SMCP IPO valuation estimated at 2.4 billion dollars

Earlier this week, FashionUnited reported that SMCP, the owner of Sandro, Maje and Claudie Pierlot, would be launching an IPO in Paris.

Now, a source close to the brand has reported that the the IPO could be worth more than 2 billion euros, or 2.4 billion dollars. The news first broke on Business of Fashion.

The valuation could be 13 to 16 times earnings before interest, tax, depreciation and amortisation, according to the source. This would put SMCP in the same range as other contemporary brands like Ted Baker, which has an enterprise value of 13.5 times EBITDA. SMCP has stated earnings on that basis rose 20 percent to 130 million euros last year.

Sandro, Maje and Claude Pierlot have managed to find success in the U.S. by riding the wave of French contemporary brands that have become must-haves among the fashion crowd. Their competitor, The Kooples, has also seen excellent success in the U.S.

Sandro and Maje currently boast numerous locations around the Greater New York City Area, including stores in SoHo, the Upper East Side, the Upper West Side, and Williamsburg. In addition, the brands also have strong department store presence in high-end department stores such as Bloomingdale's, Nordstrom and Saks Fifth Avenue.

photo: via Sandro Facebook page
River Island annual sales rise 4 percent, profit dips

For the year ending December 31, sales at River Island increased 4 percent from 932.7 million pounds (1,259 million dollars) to 970.5 million pounds (1,310 million dollars), driven by a 21 percent rise in online and mobile sales, reports Retail Gazette. The company’s operating profit, however, declined 7 percent from 145.8 million pounds (196 million dollars) to 135.7 million pounds (183 million dollars).

The report added that due to the decline in operating profit the company owners have decided against taking dividend for the second year in a row. The Lewis family had gained a dividend of 180 million pounds (242 million dollars) in 2013 and 2014. Instead the company would invest funds in its online as well as offline shopping services by increasing the number of its IT and digital positions in the UK and opening new stores and hiring more buying, merchandising and design staff.

River Island opened doors to five stores in the last month, and now the company operates a network of around 250 stores.

Picture:Facebook/River Island

eBay expands free Click & Collect services across the UK

London - eBay has announced a new collaboration with Doddle to expand its Click & Collect services across the UK. The new deal allows eBay sellers and consumers more convenient fulfilment services while providing them with greater delivery choices at Doddle locations across the nation.

The partnership is set to start with a pilot service at Doddle's flagship stores in London and Brighton, including locations at Kings Cross, Canary Wharf and Liverpool Street, before expanding out to all Doddle locations at supermarkets, shopping centres and charity stores over the next few months.

"Our buyers and sellers are at the heart of everything we do and we want to make shopping and selling on eBay as convenient and flexible as possible," said Jon Ford, Head of Shipping Development, eBay. "That means providing as many ways to improve the delivery experience for buyers. We already have millions of Click & Collect enabled listings on eBay and the collaboration with Doddle will help us extend our collection footprint whilst also helping sellers on eBay to enhance their fulfilment capabilities."

Via the new service buyers will be able to collect their eBay purchases from Doddle locations for free and eBay will notify them as soon as their item is available in store. eBay believes that this new service with Doddle will provide buyers and sellers more collection choices as well as a greater peace of mind.

Photo: Courtesy of eBay

Zalando launches startup collaboration program

German online giant Zalando has launched a new dedicated online platform to help integrate start-up technology companies into its wider website.

Named Zalando Build, the new platform is set to host tech solutions and innovations from start-ups which focus on functionality and personalization in order to streamline customers shopping experiences. These solutions will range from sizing and fitting to content and styling.

The selected start-ups are set to work directly with Zalando's teams and will be provided with the needed APIs to integrate on Zalando's main website. One of the first partners to work with Zalando via Build is Israeli startup Bllush, which connects social media images from top influencers to Zalando and ensures all images are shoppable.

"Creating a better customer journey means providing a more inspiring and personalized fashion experience. With Zalando Build, we will partner up with the fashion ecosystem by integrating startup solutions and innovations into the Zalando Fashion Store," said Marc Lamik, Head of Partnerships at Zalando.

"Our Zalando Build partners will get the opportunity to integrate their content or experiences in the Zalando Fashion Store and reach millions of consumers across Europe. Startups can leverage our size and market reach while cooperating with startups gives us the possibility to implement new products and services much faster and try out new things."

Photo: Zalando Build website

A stronger euro plays against Inditex over first half of 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

OVS H1 sales up 8.9 percent, EBITDA improves by 9.4 percent

Total sales at OVS grew by 57 million euros (67 million dollars) to 697.1 million euros (828 million dollars), a rise of 8.9 percent, with a 4.1 percent positive contribution from network development and the initial effects of the commercial agreement with Charles Voegele, up 4.8 percent. The company however said that like-for-like sales registered a flat performance, reflecting a particularly unfavourable market in July, which saw sales decline by 2.8 percent. EBITDA was 82.1 million euros (97 million dollars), up by 7 million euros (8.3 million dollars) or 9.4 percent and with margin improvement of around 10bps, compared with the same period of 2016.

Commenting on the company’s results, the company’s Chief Executive Officer, Stefano Beraldo said in a press release: “We believe that our strategy will result in further consolidation and market share gains in the Italian market, which continues to reward players that are versatile and able to benefit from economies of scale. At the same time, expansion in foreign markets will bring tangible benefits for OVS, mainly thanks to the roll-out of the commercial agreement with Charles Vögele, whose effects start becoming material in the second half of the current year.”

Sales improve across brand segment

OVS brand registered an increase in sales of 3.4 percent, 18.2 million euros (21 million dollars), driven by the steady expansion of the direct network. The company added that sales were temporarily negatively affected by changes to customs procedures that led to delays in goods imports. UPIM registered strong sales growth of 8.1 percent or 8.2 million euros (9.7 million dollars), benefiting from the positive development of the full-format Upim network and Blukids franchising.

The company’s both brands made positive contributions to the EBITDA performance. The EBITDA of the OVS brand increased by 3.5 million euros (4.1 million dollars) or 5.2 percent year on year, while the EBITDA of the UPIM brand grew by 3.6 million euros (4.2 million dollars) or 44.5 percent.

Normalised net profit was 38.4 million euros (45.6 million dollars), up by 7.6 million euros (9.03 million dollars) compared with the first half of 2016 and with a slightly lower tax rate compared to last year.

OVS opens doors to 13 new stores in H1

During the period, 13 directly operated stores and 32 stores in franchising were opened in Italy. International expansion also continued, with the opening of 19 stores, including four DOS and 15 franchised, mainly kids stores. In particular, the Spanish expansion continued to generate positive results with four new openings, including one full-format store in Madrid.

The company added that Charles Vögele restructuring plan has begun and the first two phases of cutting central costs have been completed, resulting in more than 40 million Swiss franc (41 million dollars) in cost savings on an annual run rate basis, and the whole of the Slovenian network of 11 stores has been converted to the OVS. The process of converting the Swiss stores has begun, with 75 stores converted since the second half of July to date.

Network expansion continued in the first part of the second half of the year, with another 17 stores added to date, including one full format DOS.

Picture:OVS website

Esprit posts net profit growth in FY16/17 but revenues drop 8.7 percent

For the year ended June 30, 2017, Esprit reported a net profit of 67 million Hong Kong dollars (8.5 million dollars), representing an improvement in the group’s results against 21 million Hong Kong dollars (2.6 million dollars) reported for FY15/16. The company said, this improvement was primarily driven by the performance of the underlying operations with EBITDA and LBIT from underlying operations improving by 307 million Hong Kong dollars (39 million dollars) and 386 million Hong Kong dollars (49 million dollars) respectively.

Commenting on the company’s results, Jose Manuel Martínez, Group Chief Executive Officer of Esprit, said in a media statement: “FY16/17 has been a year of good progress and marks the completion of the strategic plan that was announced in 2013. The new model implemented for product (based on best practices from vertical retailers) and for our channels (based on an omnichannel approach) has proven instrumental in stabilizing the Group financially and operationally.”

Esprit revenues decline 8.7 percent in FY16/17

Revenue of the group for FY16/17 amounted to 15,942 million Hong Kong dollars (2,041 million dollars), representing a decline of 8.7 percent in LCY, in line with the corresponding reduction in total controlled space of 8.5 percent.

However, the company added that group’s gross profit margin increased to 51.6 percent, a 1.4 percent points from last year, despite the drag from a lower proportion of retail excluding eshop revenue and the weakness of the euro for the most part of the financial year.

“Despite difficult operating conditions in the industry, we are encouraged by the continuous improvement in profitability from our underlying operations, driven by closure of unprofitable space, commercial actions to protect our gross profit margin, and decisive reduction of operating costs in FY16/17,” said Thomas Tang, Group Chief Financial Officer of Esprit.

The group’s regular OPEX (excluding exceptional items) also improved to 8,416 million Hong Kong dollars (1,078 million dollars), representing a reduction of 9.9 percent in LCY.

Esprit to close unprofitable stores to drive growth

Esprit expects that its stronger position - both in financial and operational terms, is better poised to capitalize on opportunities. In the very short-term, the group will continue its downsizing efforts, closing the most unprofitable stores. The move, Esprit said, will pose pressure on the group’s topline, but that pressure is expected to be partly alleviated by business expansion and space productivity improvements.

Overall, the Group’s revenue is expected to see a modest decline in FY17/18, to be offset by a slightly higher gross profit margin and a further decrease in operating expenses, which should outweigh the revenue decline to produce a similar improvement in EBIT (excluding exceptional items) as experienced in FY16/17.

Dr. Raymond Or, Chairman of Esprit further added that looking ahead to FY17/18, the company expects the overall operating environment to remain challenging.

Picture credit: Esprit

House of Fraser H1 profits and sales hit by heavy discounting

British department store chain House of Fraser half-year earnings fell to an 8.6 million pound loss for the 26 weeks to July 29, 2017, down significantly from its EBITDA profit of 900,000 pounds for H1 2016.

House of Fraser’s like-for-like sales and profits for the first half of the year dropped after being heavily disrupted by HoF’s new online platform launch and “significant discounting” of its in-house womenswear labels. Like-for-like sales fell 5.2 percent compared to 2016 and online sales dropped 9.8 percent during the 26 week period following the roll-out of House of Fraser’s 25 million pounds revamped online store in April. Gross profit slipped 5 percent from 207.2 million pounds in H1 2016 to 196.9 million pounds in H1 2017 as HoF cut prices to move old stock.

HoF sees 5 percent decline in profits for H1 2017

However, in spite of the sales and profits hit HoF remains upbeat about achieving growth in its final quarter, as the impacts caused by its new online platform and womenswear ranges were mainly over. House of Fraser’s new ecommerce system is said to be “working well” as “good progress” has been made to recover sale volumes. The department store group announced that it aims to be trading normally by the beginning of its final quarter in its trading update.

House of Fraser H1 profits and sales hit by heavy discounting

HoF also announced that it has completed the launch of its new womenswear in-house labels, which saw five existing womenswear brands dropped and the remaining four relaunched for AW17. The new collections have been “well received” so far, with “initial revenues” exceeding expectations” added the company. In addition, HoF also began its 18 million pound investment scheme in its distribution centre to increase capacity, drive operational efficiencies and improve profitability during the first half of the year.

The department store chain predicts this investment will deliver 5 million pounds of efficiency savings during the second half of the year, increasing to a run rate benefit of 15 million pounds of efficiency savings by the time the project is completed by mid-2018. House of Fraser also opened its first new store in the UK in nine years time during the first half go 2017. Located in Rushden Lakes, the store opened its doors on August 24. HoF also closed a loss-making store in Leicester and aims to shut an additional location in Aylesbury.

“My observations after a few weeks are that since Sanpower acquired the business in 2014 the primary focus has been on stabilising an enterprise that had been starved of investment for many years,” said Alex Williamson, CEO of House of Fraser. “Whether it be refinancing the business, the investment of over 100 million pounds in capital expenditure since the acquisition or a root-and-branch upgrade of the executive team, much has already been done to prepare us for significant transformation.”

“House of Fraser has much to be optimistic about. This is just the start of our journey with several other projects designed to provide additional sales and costs savings as part of the overall Transformation Programme due to commence shortly. I am excited about what lies ahead for the business and I am optimistic for the future. With the support of Sanpower, we are building the right foundations that position us well to deliver on our ambitions for sustainable profit growth.”

Photos: HoF AW17 LookBook

CBRE invests 8 million pounds in Angel Central

CBRE Global Investors are investing 8 million pounds as part of a comprehensive refurbishment and phased development within Angel Central, Islington in London.

The 170,000 square foot Angel Central is anchored by H&M and has a retail line up that includes Gap, French Connection, Monsoon, and Oasis. It has an annual footfall of 10 million visitors annually and last year was ranked in the top 10 of London Retail Destinations by the CACI Retail Footprint.

CBRE has submitted plans for phase one of the improvements, which are set to commence in January 2018, which will include a new link bridge at the Liverpool Road entrance, spanning the width of the scheme to create a circular connected experience at first floor. In addition, there will be a new lighting scheme, cladding and upgraded flooring, throughout the scheme, to enhance the overall environment and experience for visitors. Work is due to be completed in early 2019.

This announcement comes as CBRE Global Investors acquire 19 Upper Street for 4.5 million pounds as part of future plans to create a new gateway into the Angel Central scheme, which is to include a rooftop restaurant.

Commenting on the investment in Angel Central, Laura Wilson-Brown, director at CBRE Global Investors, said: “We are pleased to be able to share our vision for Angel Central. Our investment highlights the importance we place on the visitor experience and our desire to grow Angel Central as one of the leading retail and leisure destinations in North London.

“The refurbishment and development will create an attractive, welcoming space for visitors to meet, day or night, whilst also building upon the leisure offers already available, such as the cinema and the O2 Academy.”

Stuart Harris, commercial director and co-founder at Queensberry Real Estate, which will be delivering the planned work, added: “Islington is a prime part of Central London currently undergoing a great deal of development and Angel Central is in a key location on Upper Street, in close proximity to the underground station.

“The investment planned is part of a wider re-positioning to revitalise Angel Central as one of the most exciting retail and leisure destinations in North London.”

Image: CGI of the vision for Angel central, courtesy of CBRE

Inditex H1 net profit up 9 percent, touches 1.37 bn euros

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