Fortnightly Publication Highlighting Latest Insights From IRF Providers
Company Research
Luxury downside
Consumer Discretionary
The MSCI Europe Textiles, Apparel and Luxury Goods Index accelerated to the downside last week - Valérie Gastaldy points out that prices have already fallen below the 38% Fibo since 2022 (at 1325). Should the index correct the rally since 2020, the most reasonable target would be 1207. However, should we be correcting the move since 2009, then the target would be 1020. Re. individual stocks, Hermes is trying to break below its summer lows and the next level where Valérie would consider buying LVMH is at €665. She has set major medium-term support for Moncler at €53.3, but the stock is weaker than the other two and can more easily fall significantly lower if the other two do break equivalent supports.
Edition: 169
- 15 September, 2023
Expectations analysis for European Apparel & Branded Goods
Consumer Discretionary
Revisions for stocks in this sector continue to improve with the median move in consensus Y2 EBIT over the last three months now an upgrade of 3.7%. These good revisions alongside recent share price weakness mean the implied to Y3 EBITM ratio has fallen back to 97. Moreover, consensus Y3 revenue growth of 7.5% is still a big premium and for most stocks should compound well for shareholders. In this report, Willis Welby focuses on the opportunity at Richemont, but also likes Inditex which has had very strong revisions post recent results as well as Moncler.
Edition: 163
- 23 June, 2023
Expectations analysis for European Apparel & Branded Goods
Consumer Discretionary
Luxury Goods have had a reputation for being one of Europe’s growth areas for a long time and last month they performed well ahead of wider indices. Although the median implied to Y3 EBITM ratio of Willis Welby’s large cap universe is now 96, that still feels tenable given the generally high levels of financial productivity and the almost universal high levels of current and projected revenue growth. In this note, they focus on Cucinelli. While the company is currently on a roll, Willis Welby finds expectations ratios far too high and financial productivity too low. The likes of Kering, Inditex, Richemont and Moncler look far more appealing.
Edition: 151
- 06 January, 2023
Moncler (MONC IM) Italy
Consumer Discretionary
China survey reveals brand sales trended flat Y/Y in Q3 negatively impacted by the surge in Covid cases / lockdowns in some of the company’s high-volume markets. JL Warren models a DD Y/Y decline in retail traffic, offset by a 5% Y/Y price increase as well as a 5% incremental revenue contribution from private events in Sept capturing the brands heat from the 70th Anniversary Fashion Show. In Q4, they forecast a 25-30% Y/Y increase in sales, breaking down to 1) flat retail traffic Y/Y; 2) 10% price increase for the best sellers; 3) 5-10% retail area expansion; 4) 5% incremental revenue from Tmall.
Edition: 146
- 14 October, 2022
Consumer Discretionary
IPO'd last year, this Swiss shoe company is on a winning path as it enters the US market - boasting a beautiful design and appealing logo, ON is targeting the fashion x function customer which has proved so successful for the likes of Nike, Lululemon and Moncler. This approach allows for a range of distribution points helping to broaden brand awareness. Retailers like Bandier and Dover Street Market will also help to bring the brand to the younger fashion crowd. This is important, while this shopper can be fickle, this space, unlike denim or beauty, is not seeing new brand launches every year.
Edition: 126
- 07 January, 2022
Hermes (RMS FP) France
Consumer Discretionary
Woozle’s primary research finds Hermes stores outperforming consensus forecasts - 59% of Store Managers interviewed in the last 90-days reported that they were beating revenue targets for the current quarter. Forecasts 17-20% Y/Y growth driven by strong performances across key markets in Asia and Europe. Customer spending is surging with higher UPT and uptrading trends as limited edition products and new collection ranges are proving to be particularly popular. Also noteworthy, they seem to be less impacted with inventory issues vs. the likes of Gucci (Kering) and Moncler.
Edition: 125
- 10 December, 2021