In 2012 the Fashion & Luxury Industry Grew Less but Earned More
In fiscal year 2012 listed international companies in the fashion and luxury industry grew again, but the growth rate decreased to 8%, rom 2011's 13%, according to the Fashion and Luxury Insight, the annual report by SDA Bocconi and Altagamma which monitors the balance sheets of listed international companies with sales in excess of € 200 million.
The industry's profitability is on the rise again, the report, which this year has analysed a sample of 76 companies with combined sales of € 348 billion, highlights: the average ROI was 15%, vs previous year's 13.4% and the EBIT margin increased from 11% in 2011 to 12.4%, suggesting that companies, in a troubled economy, pursue expansion only in the most profitable avenues. Thus, the core investments on depreciation ratio predictably decreased by more than six percentage points to 146.9%.
"The attention to financial aspects", SDA Bocconi's Emilia Merlotti, one of the co-authors, says, "is confirmed by net cash generation increasing from 8.2% of sales to 10.6%, reducing the gearing to 0.39, a level never seen since the beginning of the crisis".
"New stores openings are at 5%, same as in 2011", SDA Bocconi's Paola Varacca Capello, a co-author, says. "Retail sales increased more than wholesale, but there are the first exceptions to the rule, such as the apparel cluster. Alarmingly, some of the companies which opened more stores are among the least performing in terms of sales".
Jewels and watches turned out to be the best performing cluster, with growth rates and return on investmets above the average.
"A performance analysis by geographical area", SDA Bocconi's Nicola Misani, another co-author, says, "highlights that Italian companies grew faster than the rest, thanks to newly listed companies such as Brunello Cucinelli, Prada and Salvatore Ferragamo, but display low profitability, with EBIT margins below the average".
"Company size remains a crucial driver of profitability", Altagamma's Armando Branchini 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".
INDUSTRY FINANCIAL HIGHLIGHTS
| Parameter | Industry Average |
| Sales Growth | 8% |
| Return on Investments (ROI) | 15% |
| Return on Equity (ROE) | 19.1% |
| EBIT Margin | 12.4% |
| Asset Turnover | 1.26 |
| EBITDA Margin | 15.8% |
| Net Cash Flow to Sales | 10.6% |
| Gearing | 0.39 |
| Current ratio | 2.41 |
| Intangible Assets Weight | 17.4% |
| Fixed Assets Weight | 44.8% |
| Working Capital to Sales | 19% |
| Trade Debtors Days | 37.46 |
| Core Investments on Depreciation | 146.9% |
| Total Investmets on Sales | 6.1% |
Source: Fashion&Luxury Insight, FY 2012
TOP TEN BY SALES GROWTH
| Company | Country | Cluster | Sales Growth |
| Michael Kors | Usa | Apparel | 68% |
| Lululemon | Can | Active | 37% |
| Yoox | Ita | Online specialist | 29% |
| Prada | Ita | Leather Goods | 27% |
| Hermes | Fra | Leather Goods | 23% |
| Dior | Fra | Financial Conglomerate | 21% |
| Tumi | Usa | Leather Goods | 21% |
| Chico's | Usa | Fashion Retail | 18% |
|
Ferragamo |
Ita | Leather Goods | 17% |
|
Wolverine World Wide |
Usa | Leather Goods |
16% |
Source: Fashion&Luxury Insight, FY 2012
TOP TEN BY ROI
| Company | Country | Cluster | ROI |
| Michael Kors | Usa | Apparel | 49% |
|
Coach |
Usa | Leather Goods | 49% |
|
Inter Parfums |
Fra | Beauty | 40% |
|
Next |
Uk | Fashion Retail | 37% |
| Hennes & Mauritz | Eu | Fashion retail | 36% |
| Lululemon | Can | Active | 36% |
| Hermes | Fra | Leather Goods | 33% |
|
Hugo Boss |
Eu | Apparel | 27% |
|
Fossil |
Usa | Jewels / Watches | 27% |
|
Prada |
Ita | Leather Goods | 26% |
| Limited Brands | Usa | Fashion Retail | 26% |
| Gap | Usa | Fashion Retail | 26% |
Source: Fashion&Luxury Insight, FY 2012
TOP TEN BY EBIT
| Company | Country | Cluster | EBIT |
| Inter Parfums | Fra | Beauty | 48% |
| Hermes | Fra | Leather Goods | 32% |
| Coach | Usa | Leather Goods | 32% |
|
Michael Kors |
Usa | Apparel | 29% |
| Lululemon | Can | Active | 27% |
| Prada | Ita | Leather Goods | 27% |
| Swatch | Eu | Jewels / Watches | 25% |
| Richemont | Eu | Jewels / Watches | 24% |
| Ports Design Limited | Asia | Apparel | 23% |
|
Tod's |
Ita | Leather Goods | 22% |
Source: Fashion&Luxury Insight, FY 2012
TOP TEN BY CASH GENERATION
| Company | Country | Cluster | Cash Flow to Sales |
| Inter Parfums | Fra | Beauty | 39% |
| Prada | Ita | Leather Goods | 25% |
| Coach | Usa | Leather Goods | 23% |
|
Inditex |
Eu | Fashion Retail | 20% |
| Hermes | Fra | Leather Goods | 20% |
|
Richemont |
Eu | Jewels / Watches | 19% |
| Next | Uk | Fashion Retail | 19% |
| Lululemon | Can | Active | 18% |
| Hugo Boss | Eu | Apparel | 18% |
| Hanesbrands | Usa | Apparel | 17% |
| Ports Design Limited | Asia | Apparel | 17% |
Source: Fashion&Luxury Insight, FY 2012
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