Cartier's parent just grew sales seventeen percent in six months, and a few hundred kids' clothing stores just put up signs that say everything must go. Welcome to Fashion Business Daily, it's Friday, November 13. Richemont's half-year numbers lead, then Frasers puts its own man in charge of Hugo Boss, and The Children's Place moves from bankruptcy to clearance.
Johann Rupert, in Richemont's half-year results statement:
After a particularly strong Q1 in which sales rose by 20% at constant rates, the Group maintained momentum with growth of 13% in Q2 against a high comparative of +14% in the prior-year period.
These figures came out this morning and they're company-reported. First-half sales were 12.3 billion euros, up 17 percent at constant exchange rates and 16 percent as reported. Operating profit rose 33 percent to 3.1 billion. The jewelry houses, which include Cartier and Van Cleef and Arpels, grew 19 percent at constant rates and earned a 35.3 percent operating margin. That's a very different picture from what we've been hearing all week. Americas up 23 percent and Japan up 30 at constant rates, and every region except the Middle East and Africa grew double digits. Apparently plenty of people still want a Cartier piece, whatever the economy is doing. Look under the margin, though. The headline 25.5 percent includes 229 million euros of one-time positive items tied to tariffs. Take those out and the margin is 23.6 percent. Gross margin actually fell 70 basis points on that basis, because gold costs more. Richemont says price increases and a better mix mostly offset that. So part of this growth is pricing, and the company says so itself. Fair. But pricing only works if people keep buying, and they are. The fashion side is what I'm watching. Richemont says Alaïa and Peter Millar grew double digits and Montblanc picked up, but that whole Other division still lost 12 million euros. Alaïa has real heat, and the group still hasn't figured out how to make fashion pay. Vogue's Laure Guilbault adds the consensus view. She reports second-quarter jewelry growth of 14 percent missed the 16 percent analysts expected, while group sales beat their 12 percent. Even after slowing, she calls Richemont best in class this earnings season, against LVMH up 1 percent and Kering down 1 in the third quarter. I'll take best in class. Whether it lasts depends on the holiday quarter, and the release only says it expects the environment to stay volatile.
From the German news agency DPA, published by FashionNetwork:
Frasers executive David Epstein will take over from Daniel Grieder as chairman of the Hugo Boss executive board at the start of the year, the Metzingen-based company announced on Thursday evening.
We last covered Hugo Boss on Wednesday, November 4, after a weak third quarter and Frasers going past 50 percent ownership. This is the next step. Grieder leaves on December 31, and the company says he's going at his own request. Shares fell about 2 percent to 37.55 euros on the Tradegate platform after the news, below the 38 euros a share Frasers offered in its takeover bid. "At his own request" is doing a lot of work when the new majority owner sends its own executive in to replace you. Grieder spent about five years turning Boss into a lifestyle brand, with heavy marketing, a younger customer and a big digital push. Whatever you think of the product, he had a vision. What's Frasers' vision for the brand, exactly? Nobody has said. And the reporting doesn't tell us much about Epstein, just that he's a Frasers executive. Look at the pattern, though. Michael Murray already chairs the supervisory board, and now a Frasers executive will run the company day to day. That's Mike Ashley's group controlling the board and the executive suite of a company with 20,000 employees. Frasers is a retailer: Sports Direct, plus stakes in ASOS and Puma. Hugo Boss makes and sells a brand. Those are different businesses. If the plan is to treat Boss like inventory for a retail portfolio, I worry about the product. And the Hugo line was already down about 16 percent last quarter. That's a worry, not something anyone has announced. What's confirmed is the timing: Epstein starts in January, and the first strategy he presents will tell us more than this announcement does.
From the liquidation joint venture's announcement, released by GA Group:
today announced that, following approval by the United States Bankruptcy Court for the District of New Jersey, it has commenced going-out-of-business sales at all The Children's Place and Gymboree retail locations across the United States and Canada.
On Tuesday's show the story was a Chapter 11 filing and a hunt for a buyer by year-end. As of Thursday, it's going-out-of-business sales at every store. GA Group, Tiger Group, SB360, Gordon Brothers and Hilco are running them together, and they're liquidating inventory through both e-commerce sites too. The Post and Courier counts 498 stores across the US, Canada and Puerto Rico. The Post and Courier says the website now reads "All stores closing," with 30 to 60 percent off. And the liquidators' pitch is all about families getting holiday bargains. Not a word about the people working those stores. New Jersey alone has a notice covering 732 jobs. One date matters for shoppers. Gift cards will be honored only through Saturday, December 12, under court-approved procedures. For the business, the sale process technically continues, with bids due Wednesday, December 9, per the Post and Courier. But once every store is liquidating, there isn't much of a chain left to buy. Probably the brand names and the websites. Which fits what we said on Tuesday. Six of those nine early proposals were for the going concern or the intellectual property, and three were for liquidation. The liquidators won the stores. If Gymboree comes back at all, I'd bet it's as a licensed label at somebody else's big-box store, and that's a sad way for a store chain to end. That's a guess. Nobody has said who ends up with the brand. The next real marker is the December 9 bid deadline.
If you work near any of these stories, on a shop floor, in a showroom or in a finance department, we'd love to hear what we got right and what we missed. Email fashionbusinessdaily at lantern podcasts dot com.
That's the week on Fashion Business Daily. Next episode is Monday, when we'll see whether anyone else gets close to Richemont's numbers. And whether anyone outbids the liquidators. Fashion Business Daily is a Lantern Podcast. Have a good weekend.