Fashion retailer Hennes & Mauritz posted fourth-quarter profits slightly below expectations, it said it would launch a new beauty care concept. It also plans to keep
up its rapid expansion with 400 new stores this fiscal year, nine new online stores as
well as a new range of beauty products range of make-up.
Apparel players tweak strategies to maintain profitability
Fashion retailer Hennes & Mauritz posted fourthquarter profits slightly below expectations but it said it would launch a new beauty care concept. H&M said it planned to keep up its rapid expansion with 400 new stores this fi scal year, nine new online stores as well as a new range of beauty products range of make-up, body care and hair
care products to be launched in the second half of 2015. H&M, which has invested heavily in recent years in new concepts to broaden its offer and in online expansion said most new stores will open in China and the United States. Pretax profit grew to 7.80 billion Swedish crowns ($952.7 million) in the three months to the end of November. That compared with 7.26 billion a year earlier and a mean forecast in a Reuters poll of analysts for 7.96 billion.”Well-received collections for all our brands and continued strong expansion both in stores and online have helped increase our market share,” he sports world. Chief Executive Karl-Johan Persson said on the full year. A staff incentive
payout weighed on the profit. H&M, which had already reported quarterly sales, predicted 14 pct sales growth in January after 15 percent growth in December, the first month of its fiscal first quarter. H&M said it expected a rise in the US dollar to increase sourcing costs this year.Meanwhile, Puma and United Legwear & Apparel Co. LLC (ULAC)
have initiated a joint venture (JV) in North America for the production, sales, marketing, and distribution of Puma children’s apparel. The JV will operate in the name of Puma
Kids Apparel NA, LLC and day-today operations will remain at ULAC, with guidance and cooperation of Puma’s creative, merchandising, sales, and marketing teams. Puma
Kids fi rst collection will be launched with the Spring/Summer 2015 line, while the product design has been heavily integrated into Puma’s branding and culture. Many pieces are neon bright with splashes of black, white, or grey, made with comfort/
performance fabrics and features, and cut in fashion-forward silhouettes. Combined, these elements are designed to create a sleek, powerful look that accurately reflects Puma’s new brand positioning, ‘Forever Faster’. Channels of distribution for Puma Kids garments include department stores, independent retailers, e-commerce channels,
athletic and specialty chains. Jay Piccola, president of Puma North America said in a media report, “We have had amazing success working with ULAC on the socks and body wear business and we are confident for the same growth in kid’s apparel.” ULAC is a New York based entity that designs, manufactures, markets, and distributes legwear and apparel to some of the world’s leading retailers and has nine highly-recognized
licensed brands. While, Puma offers performance and sport-inspired lifestyle products in categories such as football, running, training and fitness, golf, and motorsports, it also
engages in exciting collaborations with renowned design brands such as Alexander McQueen and Mihara Yasuhiro to bring innovative and fast designs to the sports world.
Luxury brands on a safe ride
LVMH announced record sales and net profit, although other figures released by the leading global luxury company missed expectations. The maker of Louis Vuitton handbags and Moet & Chandon champagne said sales rose 6 percent last year to a record 30.6 billion euros ($35.1 billion). Meanwhile net profit at the France-based company came in at a record 5.65 billion euros. However stripping out the 2.8 billion booked thanks to distribution of shares by Hermes, a rival in which LVMH has built up a stake, the net profit falls under 3 billion euros, far below analysts’s expectations and the 3.4 billion euros in net profit the company posted in 2013. Operating profit at LVMH, which also includes Givenchy and Guerlain in its stable of luxury brands, slid 5 percent to 5.7 billion euros. Its operating margin dropped by 2 percentage points in 2014 to 19 percent. Chief executive Bernard Arnault said “the 2014 results confirm the capacity for LVMH to progress despite economic and currency uncertainty”. Wines and spirits sales
dropped by 5 percent, but rose in all other business segments. With 10 percent growth in sales of fashion and leather goods to 10.8 billion euros, the segment reinforced its
top spot in the group. Net profit from recurring operations fell in all business segments except in fashion and leather goods which managed a 2 percent gain. The net profit
from the wines and spirits segment fell 16 percent to 1.1 billion euros, which LVMH said was primarily due to slowing cognac sales in China. Luxury companies have been hit hard by a crackdown on corruption in China that has brought an end to expensive gifts like watches and liquor to officials. Net profit fell by 23 percent in the watches and jewellery segment to 283 million euros. LVMH said multi-brand retailers held back on purchases of watches in the uncertain economic environment. LVMH watch brands
include Bulgari and TAG Heuer. The selective retailing segment posted the fastest growth at 7 percent thanks to an “exceptional year” for its Sephora chain of perfume shops. “Despite a climate of economic, currency and geopolitical uncertainties, LVMH is
well-equipped to continue its growth momentum across all business groups in 2015,” the company said in a statement. The company’s management said it would propose to
shareholders increasing the dividend payment by 3 percent to 3.20 euros. Meanwhile, Italy’s Marzotto family has completed the purchase of a 7 per cent stake, or 5 million shares, in luxury goods company Hugo Boss through holding companies Zignago
Holding SpA and PFC Srl, the firms said in a statement. The deal was supported by a 150 million euros ($169 million) financing arranged by Mediobanca.
Food Service cos expanding portfolio in US, cautious about expansion in Russia
Dunkin’ Donuts is expanding its U.S. menu with cold blended drinks, including a milkshake-like frozen Dunkaccino, as it and other fastfood chains seek to boost sales in
a competitive market. The coffee and-doughnut chain will also offer fruit smoothies and reduced-calorie versions of its popular Coolatta drinks, said John Costello, president of global marketing and innovation for parent company Dunkin’ Brands Group Inc in a media report. Suggested prices for the 16-ounce size of the drinks will be less than $3. Starbucks Corp, the company’s more upscale rival, has a nearly $3 billion business selling icy, blended Frappuccino drinks.McDonald’s Corp, Dunkin’s most direct U.S. competitor, added fruit smoothies and frappes a few years ago as part of its McCafe menu expansion.The vast majority of the nearly 8,100 U.S. Dunkin’ Donuts restaurants will install new blenders this year as part of the drink expansion, Costello said. The cost for that new equipment varies, but is less than $6,000 per restaurant, the company said. Tests of the new frozen beverages suggest that they will be popular in the afternoon and evening, when coffee chains work to lure customers, Costello said in a
media report. The new drinks did not significantly affect service speed in restaurants where they are available, he said. Dunkin’ Brands, which will report fourth-quarter results on Thursday, did not disclose sales of Dunkin’ Donuts’ new frozen drinks.
On the other hand, McDonald’s Corp. will open fewer new restaurants in Russia this year than last because a fall in the rouble has increased expansion costs and is hurting consumers. The rouble, hit by a drop in oil prices and Western sanctions over Ukraine, has fallen more than 50 percent since early 2014, fueling inflation. Russia now faces its first recession since 2009. McDonald’s will open at least 50 new restaurants in Russia compared to 73 last year, having earmarked 6 billion roubles ($87 million) for capital expenditures, the same amount as in 2014, Khasbulatov said in an interview. “There is a major currency component in new openings. Given the current conditions of doing
business in Russia … we are pleased that the investment resources we have been allocated remained at last year’s level,” he said in a media report. The U.S. fast-food chain, which has been operating in Russia for 25 years, was hit by a string of snap inspections by a state regulator last year, which were widely seen as retaliation for the West’s sanctions against Moscow over its role in the Ukraine crisis. Those inspections led to temporary closures of 12 restaurants, including the world’s busiest on the Pushkin
square in Moscow. Khasbulatov said the company had taken advantage of some of the closures to modernise the restaurants. All have reopened but their sales have yet to catch up with pre-closure levels. The unexpected scrutiny had not led McDonald’s to changing its attitude towards the market, Khasbulatov said.”New restaurants must meet
our profitability expectations. (Fewer openings) is only a question of having a healthy business,” he said in the media report. He added same-store sales growth could fall to zero in 2015 because of high inflation and an expected decline in spending on eating out, but new openings should help grow overall sales.