Следующие один за другим в последние недели атаки террористов заставляют тысячи туристов, собиравшихся посетить европейские страны, срочно менять планы. В разгар лета во многих популярных у туристов местах отдыха в Старом Свете царит непривычная тишина. Туроператорам, гостиничным сетям, авиалиниям и компаниям по производству товаров роскоши сейчас не позавидуешь. После серьезного удара, нанесенного им британским референдумом, сейчас им пришлось столкнуться с новой бедой – страхом туристов перед террористами
China’s economic slowdown and anti-corruption crackdown on gift-giving is hitting some areas of the luxury export market – French wine and spirits, Swiss watches, British cigarettes. However, at least one high-end segment may be holding its value – handbags and luggage. We look at two key competitors who are carrying a lot of baggage. View our corresponding infographic to find out more on this topic. LVMH Moët Hennessy Louis Vuitton (LVMH.PA) and Hermès International SCA (HRMS.PA) make the bulk of their money from leather goods and bags. In early September, they called a truce in their share-ownership wars, as reported in this Reuters story, but they are still fierce competitors in the retail markets. Geographically, 33% of Hermès’ revenue is generated in Asia, and bags and luggage continue to be their strongest driver (exhibit 1). As other retailers pull back in China, Hermès is continuing to open stores, with the premiere of an extravagant four-story outlet in Shanghai, followed by two more planned in Beijing and Chengdu this year. Exhibit 1: Hermès Business Segments Source: Thomson Reuters Eikon LVMH courts Chinese customers Similarly, 30% of LVMH’s revenue comes from Asia (excluding Japan). The high-end Chinese consumer is known to travel abroad to flagship stores for a bigger selection of goods than in the mainland. Fendi, a division of LVMH, recently opened a pavilion in Paris with a Chinese look and feel. LVMH and Hermès’ bags are also sold at luxury department stores and on e-commerce sites. It’s important to note that these premium bags are almost always sold at full price – no discounting. Thomson Reuters discovered this in a collaboration with StyleSage Co., which analyzes retailers, brands and products across the globe. Richly Valued As an equity investment, Hermès looks as expensive as its Birkin bag. Our StarMine Intrinsic Valuation (IV) model accounts for the systematic biases that our quantitative research team found in sell-side estimates. Thus, the faster the expected growth rate, the more optimism bias. And more-distant estimates are more optimistically biased than nearer ones. For Hermès, after adjusting LTG estimates for optimism bias, the StarMine IV model places fair value at €148 per share. In contrast, the market price is €243 per share. Plugging in today’s price and solving for growth suggests that investors are optimistic. Hermès market expectations are high with an implied 10-yr CAGR of 13.5%. Exhibit 2: Hermès Intrinsic Valuation Source: StarMine Return on equity Digging deeper into the data, we look at ROE, a measure of how well retailers use capital to generate profits. Industry-wide, ROE is a robust 21.2%. The analysts’ mean forecast is that Hermès is expected to generate 27.9% return on equity this year, while a highly rated StarMine analyst with a very accurate rating suggests a figure closer to 28.3%. That’s considerably stronger than LVMH, where the ROE estimate is 12.6%, below the industry mean. Hermès strong ROE means they are well positioned for long-term growth. Exhibit 3: Hermès ROE Source: Thomson Reuters Eikon Analysts like Hermès Hermès appears to be leading the luxury market from a position of relative strength. Its StarMine ratings look robust, with a score of 83 on the StarMine Analyst Revisions Model (ARM), indicating that there is a modest chance that analysts will boost their earnings estimates. However, LVMH sports a score of 15, a sign that analysts may become bearish and lower earnings estimates. Exhibit 4: Hermès StarMine Analyst Revisions Model Score Source: StarMine/Thomson Reuters Eikon No discounting Selling at full price means that profit margins are less likely to be hit. As a result, we look at LVMH and Hermès’ gross margin, operating margin and net margin. On trailing half-year margins, Hermès’ gross margins have remained somewhat stable over the past three years. Currently, it is 69.5%, matching the industry average, while LVMH has been slightly above the industry average over the past year. However, when looking at net margin performance, Hermès has been significantly above the industry average, while LVMH has been on par or slightly below the industry. A solid gross margin will usually lead to efficiency in net margin. For Hermès, this means the ability to pass on high-quality leather material and labor costs to its elite shoppers. Exhibit 5: Gross Margin, Net Margin for Hermès and LVMH Source: StarMine Operating efficiency Operating margin indicates how efficiently management is generating results on its assets. Hermès Return on Net Operating Assets (RNOA) is the highest in five years at 65.3% and substantially higher than the 30.6% RNOA mean for other luxury retailers within the industry. Exhibit 6: Hermès Return On Net Operating Assets Source: StarMine Cash flow picture Hermès’ operating cash flows are the strongest in five years. From the graph below, it is evident that the company performs the strongest during the holiday season. For the most part, Hermès continues to report stronger cash flows from operations. This is reflected in net income, also the highest in five years. Exhibit 7: Hermès Cash Flow from Operations vs. Net Income Source: StarMine Good quality earnings Moreover, Hermès scores an 83 out of a possible 100 on the StarMine Earnings Quality Model. This suggests that its profits remain of high quality, meaning they are more likely to be sustained in the coming quarters. This is evident when looking at the graph below, which suggests that its earnings are backed by strong cash flows, and are more sustainable going forward. LVMH sports a lower score of 38, a sign that its profits may not be coming from sustainable sources. Exhibit 8: Hermès StarMine Earnings Quality Model Score Source: StarMine Here’s why Although LVMH’s operating profit margin has remained steady for the most part, it fell in the last reporting cycle. LVMH operating profit margin is now 18.4%, the lowest showing in six years, and slightly above the industry average of 17.1%. Exhibit 9: LVMH and Hermès Operating Profit Margin Source: StarMine Cash flow issues at LVMH LVMH has also seen weak cash flow. Despite posting positive net income in the past reporting cycle, cash flow was weaker. This translates into poor earnings quality and while it still has the biggest market share in the industry, it is definitely facing more competition from the likes of luxury conglomerate Kering. The difference is that Hermès isn’t feeling the pinch as much, due to its strong brand and pricing power which are boosting its margins and earnings quality. This suggests that its iconic Birkin bag might be bulletproof after all. Exhibit 10: Hermès Free Cash Flow vs. Net Income Source: StarMine Receive stories like this to your inbox as they are published. Subscribe here and follow us @Alpha_Now on Twitter or check out the Thomson Reuters Eikon blog. If you are looking to access Thomson Reuters data or analytics, register for a free trial.
Французский производитель элитных товаров Hermes International не намерен "существенно" повышать цены на свою продукцию в 2013 году, даже несмотря на возможное снижение рентабельности на фоне ослабления курса йены по отношению к евро. Следует также отметить, что компания намерена увеличить размер годовых дивидендных платежей с 2 евро на акцию годом ранее до 2,50 евро на акцию. При этом Hermes уже выплатила предварительный дивиденд в размере 1,50 евро на акцию.
Французский дом моды Hermes International SCA подвел итоги 2012 года. Чистая прибыль компании выросла на 24,6 процента и составила 740 млн евро
По итогам 2012 года чистая прибыль французского дома моды Hermes International SCA выросла на 24,6% - до 740 млн евро с 594 млн евро в 2011 году.
Пока одни стоят в очереди за кредитами, другие - за сумками. Платят за них, как за машины эконом-класса, а когда заветная сумка в руках, встают в очередь на новую. Чистая прибыль компании выросла до 740 млн евро с 594 млн евро в 2011 г."Первое, о чем я должен сказать по Hermes, так это об исключительно доверии к продукции компании. Сумки Birkin и Kelly – это сумки ручной работы. Каждый год цены на продукцию компании растут, но люди все равно покупают эти сумки по одной просто причине, потому что, возможно, это вообще самые лучшие сумки, это вроде как "Роллс-Ройс" среди сумок. Обладание сумкой Birkin или Kelly означает, что у вас есть доступ к товарам такого рода – я сейчас говорю о 6500 евро за сумку. Очередь на сумки Birkin или Kelly составляют около 6 месяцев, но, несмотря на это, люди хотят покупать эти товары и платить высокие цены. Это стратегия стоимости в отличие от Луи Виттона, например, который придерживается стратегии объема", - комментирует Янн Ле Флок, основатель и глава Instant|Luxe.Операционная прибыль Hermes подскочила на 26% до 1,12 млрд евро.Выручка компании за год увеличилась на 23% до 3,848 млрд евро.Выручка Hermes в странах Азии без учета Японии подскочила в 2012 г. на 25%. Компания открыла два новых магазина - в Тайване и Китае, еще шесть магазинов были обновлены или расширены.В Японии выручка дома моды поднялась на 7%.Хорошие показатели роста продаж Hermes были зафиксированы в Европе (15%) и США (14%).Операционная маржа компании в прошедшем году увеличилась до 32,1% - максимума с момента IPO Hermes в 1993 г.
Французский производитель элитных товаров Hermes International отчитался о прибыли за 2012 г., превзошедшей прогнозы аналитиков в связи с ростом спроса в Азии. Сообщается, что операционная прибыль компании повысилась на 26% до 1,12 млрд евро ($1,45 млрд), в то время как аналитики ожидали прибыль в размере 1,06 млрд евро. При этом маржа операционной прибыли расширилась до 32,1%. Как стало известно, чистая прибыль компании выросла с 594 млн евро до 740 млн евро.
A month ago, when we reported that Abe's reflation effort was "succeeding" if maybe a little too much by sending gasoline prices through the roof, the Nikkei's conclusion was that "Households are beginning to feel pinched by the weaker Japanese currency." Today they are pinched that much more as we find that the effectiveness of the plunging Yen has just forced luxury titan LVMH to hike prices in Japan by the most ever. From Bloomberg: "LVMH Moet Hennessy Louis Vuitton SA raised some prices by an average 12 percent at its flagship brand in Japan, the unit’s biggest price hike, to offset the impact of the yen’s slide on sales. The Louis Vuitton brand raised prices Feb. 15, spokeswoman Kaori Fuse said. Retailers such as LVMH, the world’s biggest luxury goods maker, are confronting a plunge in the yen that undercuts the value of sales in Japan, the second-biggest market for personal luxury goods." And where ultraluxury goes, everyone else is sure to follow. It remains to be seen just how much more of this relentless inflation the local population can stomach, considering the bulk of local assets is not in the stock market, but in such safe investments as bonds and deposits as shown in "Why 'This Time Won't Be Different' For Japan In Two Charts." It also remains to be seen just how much domestic sales will plunge at LVMH and elsewhere, when indexed for the new prices as the failure of Abenomics to translate inflation into higher wages. One thing is sure: with at least a several quarter delay before any of the incipient inflation can translate into personal consumption, one wonders: will the Abe government last long enough to offset increasing household anger resulting from soaring prices before sellers' remorse settles in, and Abe's repeat appearance at the helm of the Japanese government is once again cut prematurely short. More: “There’s a risk of a currency battle” after the yen plummeted at the end of last year, LVMH Chief Executive Officer Bernard Arnault said Jan. 31. “We are an importer, so the weakening yen and rising raw material prices are part of the reason for the price increase,” Louis Vuitton Japan’s Fuse said in a phone interview. The increase is the largest since the Japan unit was established in 1978, said Fuse, who declined to comment on individual product prices. The yen has dropped about 13 percent against the dollar in the past three months, the worst performance among 16 major currencies tracked by Bloomberg. The last time Louis Vuitton raised prices in Japan was in August 2011, when the business added 3.8 percent to the price of watches and fine jewelery. Fuse said the company regularly reviews pricing and that in November 2008 it lowered the price of leather goods and accessories by about 7 percent in Japan. And the obligatory spin punchline: Analysts said the higher price increases probably wouldn’t drive away customers. “Brand goods have low price sensitivity,” said Dairo Murata, a retail analyst at JPMorgan Securities Japan Co. “People who buy those brands won’t be so frugal as to care about another 10,000 yen.” When was the last time analysts were ever wrong. But at least they didn't add that higher prices will add to even more demand. LVMH appears to be alone for now: The Japan units of Tiffany & Co. and Hermes International SCA aren’t considering raising prices at the moment, according to company officials who asked not to be identified, citing company policy. A spokeswoman for Prada SpA declined to comment on the possibility of higher prices. We look forward to updating this space when rhetoric gives way to simple bottom line math, and everyone else does what LVMH just did. As for the average Japanese household, that which is not shopping with "low price sensitivity" at LVMH, Prada or Hermes, one fails to see just how soaring prices will encourage them to stimulate the local economy.
Jan Fasen confirmed he bought a consignment of horsemeat from two Romanian abattoirs and sold it to French companies A Dutch meat trader has emerged as a key suspect in Europe's spiralling horse meat scandal following allegations that he was convicted as recently as last year for passing off horse as beef.Speaking exclusively to the Guardian, Jan Fasen, a director of Draap Trading Ltd, confirmed he bought a consignment of horsemeat from two Romanian abattoirs and sold it to French food processors. He insisted he had clearly labelled it as horse.But on Wednesday Dutch broadcaster NOS reported that Fasen was sentenced in January 2012 for deliberately marketing South American horsemeat as halal-slaughtered Dutch beef and falsifying documents.Draap Trading Ltd is a Cypriot-registered company, run from the Antwerp area of Belgium, and owned by an offshore vehicle based in the British Virgin Islands. Draap spelled backwards is the Dutch word for horse.Despite his denials, the food trader appears to be at the centre of investigations into how horsemeat entered the European food chain. In January 2012 he received a one-year jail term, NOS reported. He allegedly falsified papers to deceive customers. A second Dutch meat trader, from the town of Oosterhoutse, was given community service, NOS added.Draap Trading Ltd delivered meat to the French company Spanghero, which in turn supplied another French company, Comigel. The Findus lasagne products found in Britain containing horsemeat came from a Comigel factory in Luxembourg. Spanghero insisted that the meat delivered to its Castelnaudary plant in southern France had arrived labelled "Beef - originating in EU". The company said: "The meat received was beef meat. This was the order that had been placed. Spanghero did not treat or do anything to the meat."Frozen meat products were, meanwhile, withdrawn from supermarket shelves in the Netherlands, Belgium and France as fears grew that the mislabelling of frozen foods was much more widespread than Findus lasagne in Britain. "It's very much a pan-European issue now." said an EU diplomat.The Romanians have loudly protested their innocence amid allegations that they supplied horsemeat as beef. Fasen, who bought the Romanian horsemeat and kept it at a cold storage company in Breda in the Netherlands before selling it on to Spanghero, said he would hand over all his information to the Cypriot authorities, who would then pass it on to the French. Dutch food inspectors went to the Breda warehouse on Wednesday."As for the Romanian supplies, they delivered 100%," Fasen told the Guardian. "When they deliver beef, they deliver beef. No problem. When they deliver horse, they deliver horse. There is never, ever horse invoiced as beef. I was 100% sure I was buying horse. We sold it to Spanghero in France as well as to clients in Belgium and Holland. It was all sold as horse. There is no issue."He added: "Somebody made a mistake and it was definitely not us."The two Romanian slaughterhouses at the centre of the scandal also insisted the horsemeat sent to Holland was properly labelled. Doly Com and Carmolimp confirmed they had sold the horsemeat to Draap. Iulian Cazacut, owner of Doly Com slaughterhouse, said his firm sold over 350 tonnes of horsemeat to the Cyprus company last year, at a price of €2 a kilo.Cazacut said: "We worked for two years with this Cyprus company. They started buying beef from us a month ago but previously they only bought horse. The problem is not here, it is somewhere out there. We didn't send minced meat. We only sent unprocessed meat."The scandal has focused attention on the murky pan-European supply chain for meat products, which stretches from abattoirs to supermarkets via mysterious offshore companies.An investigation by the Organised Crime and Corruption Reporting Project revealed yesterday that that Draap Trading Ltd was registered in 2008 in Limassol, Cyprus. Its sole shareholder is Hermes Guardian Ltd, an offshore company in the British Virgin Islands. A Draap representative, Andreas Mercruri, refused to disclose the beneficial ownership of the company.Speaking from Cyprus, he told OCCRP: "I'm sorry but with everything that is going on at the moment we are not able to comment on anything at this time." Mercruri answered from the offices of Trident Trust , a Cyprus firm that provides company formation and incorporation services on the island. Trident Trust mentions on its website that beneficial ownership information of the companies it incorporates is not disclosed to any regulatory authorityThe same Hermes Guardian company is a shareholder in at least a dozen other Cyprus, Panamanian and Russian based companies.Cyprus company records indicate a Trident Trust company as a secretary of Draap Trading while its director is another Cyprus company by the name of Guardstand Limited. The latter's paperwork points to a link with Russian business.Authorities in Romania have suggested that international criminal networks may be involved in the opaque meat trading business. Sorin Minea, head of Romalimenta, the Romanian food industry federation, described France's consumer affairs minister, Benoît Hamon, as an "idiot" after he suggested Romanians may have been responsible for "a case of fraud".Minea told the Guardian: "There is an international mafia ring behind this problem. I don't know who they may be, or whether any Romanians are involved. But if you think about it, there were five intermediaries so I'm sure that an international network is involved."He also angrily dismissed the idea that recent European legislation banning horses and carts from Romania's roads had led to a glut of horsemeat: "What was said, that Romania has been slaughtering millions of horses, is a complete aberration. Romania does not have millions of horses at its disposal to slaughter. If we had done that, perhaps we would be better off financially now."Additional reporting by Roberta Radu and Kim Willsher in ParisHorsemeat scandalFood & drinkFood & drink industryThe meat industryNetherlandsEuropeEuropean UnionRomaniaCyprusLuke HardingIan Traynorguardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
Французский производитель элитных товаров Hermes International сообщил, что рентабельность по итогам 2012 года достигла рекордного уровня благодаря 23%-ному росту продаж. Так, выручка в прошедшем году увеличилась до 3,48 млрд евро ($4,66), превзойдя средние прогнозы аналитиков в 3,42 млрд евро. Без учета колебаний курса валют продажи повысились на 16%, в то время как компания ожидала 13%-ного роста показателя.
Hermes International SCA, французская компания, производящая сумки Birkin по $ 10 тыс., сообщила о том, что в 2012 г. рентабельность достигла рекордного уровня, а продажи выросли на 23%.
Hermes International SCA, французская компания, производящая сумки Birkin по $ 10 тыс., сообщила о том, что в 2012 г. рентабельность достигла рекордного уровня, а продажи выросли на 23%.
This post is adapted from the Jan/Feb HBR article, "The Best-Performing CEOs in the World." Many management thinkers argue that it is no longer enough to do well financially; companies also need to improve the well-being of (or at least not harm) the communities in which they operate, the environment, and their employees. (See, for example, "Creating Shared Value," by Michael E. Porter and Mark R. Kramer.) That's the good news. The bad news is that stellar performance on both dimensions is no common or easy feat. This year we examined the correlation between the financial performance of leaders on our list and their social and environmental performance as measured by MSCI, a highly reputable firm that rates major companies. Despite all the rhetoric, we discovered that the correlation between the two sets of data is, well, zero. You can see this clearly in the graphic blow, which maps the long-term financial performance of some 1,100 CEOs against their companies' social and environmental performance for their last two years in office (click for a larger view). Companies are scattered all over this chart. Though many articles suggest that responsible corporate behavior — say, in sustainability — will automatically improve your bottom line, clearly it's not as simple as that. Some companies probably aren't managing with such issues in mind. Some may not have attractive social or environmental strategies; some may have misalignment between those strategies and the overall corporate strategy; and some may have incomplete measures of social or environmental practices. But the chart did reveal outliers. Five percent of the CEOs for which we had sufficient data fell into the box at the top right; they delivered great financial performance year over year and performed strongly on social and environmental dimensions. It is a rare achievement, indeed, but it is possible. These trendsetting CEOs are the new role models for leaders pursuing the paradigm of creating shared value. One example: Franck Riboud of Danone, a French multinational with $27 billion in annual sales. Danone's excellent financial performance earned him a spot in the top 10% of this year's sample (a truly amazing achievement for a consumer goods company); at the same time, the company received extremely high ratings from MSCI. Another outlier is Natura's Alessandro Carlucci (who made the top 6% for financial performance), a leader among CEOs who believe that alleviating poverty and inequality and protecting the environment are intimately tied to their business agendas. Carlucci and Riboud have both confronted the key social or environmental issue in their industry (in Danone's case, obesity and unhealthful food consumption; in Natura's, deforestation and poverty) and redirected their company's strategy to tackle it. We also looked at CEOs whose companies had high social and environmental performance in 2010 but whose financial performance kept them out of the top 15% of the group studied that year. Since doing both well and good can be a long-term strategy, we wanted to see whether any of those CEOs had then moved into the top 15% of the current financial ranking. We found four: the leaders of Adidas, Inditex, Hermès International, and Eaton. At Adidas, CEO Herbert Hainer oversaw the implementation of a triple-bottom-line philosophy, a massive push to slash the company's carbon footprint, and the increased use of recycled polyester as well as sustainably farmed cotton in products. One of Adidas's latest sustainable innovations is DryDye technology, which removes the need for water in the dyeing process. At Eaton, Alexander Cutler has embedded sustainability into the company's culture and practices. The diversified power management company develops innovative products and processes, such as hybrid electric and hydraulic power trains and electric power control systems, that help customers and consumers conserve resources and reduce their carbon footprint. This new breed of leaders not only rejects the idea that financial market demands are more important than stakeholders' needs but also demonstrates that companies can excel at meeting both. These CEOs have shown the way, and others can learn from them. We don't foresee a time in the near future when measures of social performance will be as objective as the measure of long-term financial performance we've developed. That said, we will continue to track how CEOs are doing in the two areas, with the aim of encouraging leaders to shine in both.
Chinese police, working with U.S. authorities, have arrested 73 people for manufacturing and exporting fake international brands including Hermes , LVMH's Louis Vuitton and Coach Inc , state news agency ...
Французский производитель элитных товаров Hermes International отчитался о квартальных продажах, превысивших прогнозы аналитиков, и повысил целевой уровень по темпам роста выручки за текущий год, сославшись на укрепление спроса на азиатских рынках. Так, в третьем квартале продажи увеличились на 24% г/г до 848,6 млн евро ($1,08 млрд). Аналитики в среднем ожидали 803,8 млн евро. Компания заявила, что намерена достичь роста выручки по итогам 2012 г. более чем на 13%, ранее целевой уровень составлял 12%.
Payoff package for the former News International executive is far in excess of the £1.7m speculated on after her departureRebekah Brooks received a payoff worth about £7m after resigning as chief executive of News International at the height of the Milly Dowler phone-hacking crisis in July 2011.The exact figure has never been disclosed by the Murdoch company – whose parent News Corporation holds its annual meeting on Tuesday – but one source said they believed it was between £6m and £8m.An intimate of Rupert Murdoch, Brooks started out as a secretary at the News of the World in 1989, becoming editor of the News of the World and the Sun in succession.She retained Murdoch's confidence as the phone hacking crisis intensified. After the News Corp patriarch flew into London in July last year, he took Brooks out for dinner, declaring that she was his "top priority" when questioned in the street by journalists.The payoff package, far in excess of the £1.7m that was speculated about after her departure, comprised cash payments for loss of service, pension enhancement, money for legal costs, a car and an office.News International declined to comment on the sum involved, but company insiders stressed there were "clawback" arrangements, which mean Brooks would have to pay some of the money back in certain circumstances.It is understood that payback would be enforceable if Brooks was to be found guilty of a criminal offence relating to her employment. She is currently facing charges relating to interception of communications and obstruction of justice.News Corp has not had to make any disclosure in public accounts, because its British companies have not reported their results to Companies House yet. News International companies have a financial year that ends on 30 June, so any filing covering the period of the Brooks payoff would not be due until next year.The revelations about the size of Brooks's payoff are likely to be raised at the company's annual shareholder meeting at News Corp's Fox studios lot in Los Angeles. Some investors, such as the British group Hermes, are expected to vote against Rupert Murdoch remaining as chairman in the wake of the phone-hacking scandal, but the media tycoon controls 40% of the votes so he is unlikely to lose. The Independent newspaper reported on Tuesday that private emails between David Cameron and Brooks were withheld from the Leveson inquiry into press standards.A government lawyer advised the prime minister that the emails involved were not "relevant". They were said to reveal the close friendship between Cameron and Brooks and were described by sources as containing "embarrassing" exchanges.A Downing Street spokesman said: "All the material the inquiry asked for was given to them."It is understood that there was an agreement between No 10 and the Leveson inquiry that Cameron would provide all emails and texts relevant to the News International bid for broadcaster BSkyB, as Cameron set out in his witness statement to the inquiry. Government sources said this was accepted by the Leveson inquiry and some texts or emails handed to the inquiry by Cameron, deemed to be on the margin of this definition, were not published by Leveson.No 10 is not challenging the newspaper's claim that Cameron had sought legal advice on the nature of the exchanges to be given to Leveson.Rebekah Brooks trialNews InternationalNewspapers & magazinesDan SabbaghPatrick Wintourguardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
Luxury retail stocks, once the darlings of global growth after the 2009 market bottom, have struggled since August 2011. The recent weakness compared to the SPDR Retail ETF (XRT) in light of more quantitative easing may portend further weakness for the global economy. Released: October 11 2012Length: 3 Minutes Until recently, luxury retailers had seemed to be an anomaly; even as the rest of the economy struggled, they continued to generate impressive returns. But over the course of 2012, the dependence of this group of retailers on international consumers, notably from China and Japan, has begun to weigh on their performance. Now, the concern is that these purveyors of designer handbags and other high-ticket consumer goods may end up serving as the proverbial “canary in the coalmine”, warning us all about what lies ahead for the global economy. We looked at 10 publicly-traded luxury retailers that do business worldwide: Blue Nile (NILE.O), Coach (COH.N), Tiffany (TIF.N) and Ralph Lauren (RL.N) in the United States; Burberry Group (BRBY.L) and Mulberry Group (MUL.L) in the United Kingdom; Italian companies Salvatore Ferragamo (SFER.MI) and Honk Kong-listed Prada (1913.HK) and, from France, Hermes (HRMS.PA) and LVMH (LVMH.PA). We’ll refer to this collection of companies as our Luxury Retail portfolio. As Datastream data shows, the Luxury Retail portfolio (represented by the blue line in the chart below) dramatically outperformed the broader market from the time stocks hit bottom in early 2009 all the way through until August, 2011. Investors who owned those stocks were able to celebrate returns of about 300% in that period, triple the 100% return earned on the S&P 500. Since then, however, it’s been tougher to hang on to those gains, much less extend them. Figure 1. Over the course of the last year, it is the more mundane retailers – outdoor equipment retailer Cabela’s Inc. (CAB.N) or Gap Inc. (GPS.N), for instance — that have led the retail sector higher. The popular S&P Retail ETF (represented by the orange line in the chart below), also known as the XRT, has outperformed the luxury group. According to Thomson Reuters retail analyst Jharonne Martis-Olivo, the rate of year-over-year growth in same-store sales for the companies in the Thomson Reuters Same Store Sales index peaked in September. Since mid-August of 2011, as you can see from the rise in the line representing the XRT compared to the choppy line representing the Pradas and Tiffanys of the world, it’s clear that something has gone awry in Luxury Paradise. Figure 2. This year, the our portfolio of selected luxury retail stocks peaked in May; meanwhile, the stocks making up the general retail ETF collectively hit new highs, following the broad stock market in its late-summer and early autumn surge. Of more concern than this relative performance trend, however, is how the two groups have performed in the wake of the September 13 announcement by the Federal Reserve of its latest attempt to stimulate economic growth – QE-3, or perhaps more accurately, quantitative easing to infinity. Both groups of retailers rallied up to the date of the announcement, but in the selloff that followed, the Luxury Portfolio stocks have fallen more significantly. Do the fundamentals warrant such a drop and such a degree of underperformance? We used StarMine models and compared stocks in our Luxury portfolio with those in the retail ETF, as well as those in the broader market, represented by the S&P 500 index. The StarMine SmartEstimate data show that analysts have been cutting their earnings outlook for the luxury retailers over the last 30 days, to the tune of 0.5%. Meanwhile, they have boosted their outlook for profits from companies with the retail ETF (such as J.C. Penney (JCP.N) and Gap) by an equivalent amount. (When it comes to the S&P 500 as a whole, analysts have cut their earnings forecast by 0.4% in the same period.) Over the coming 24 months, the StarMine SmartEstimate data show analysts expect the Luxury Portfolio’s revenues to increase by 9.4%. That’s significantly higher than the 6% gain they are forecasting for both the “regular” retailers in the ETF and even better than the 4.8% gain they expect from S&P 500 companies as a group. But in spite of having the most favorable top line estimates, the SmartEstimate earnings forecasts for the Luxury portfolio of 13.1% growth lag the 14.8% forecast growth for the companies in the broader retail ETF. (The projected earnings growth rate for the S&P 500 lags both, at 11.4%.) Even if luxury looked like it was worth paying for – at least, in terms of luxury stocks – the valuations of these companies make it very clear that there are no discounts among the luxury brands. At a price to tangible book ratio of 10.1, luxury stocks are no bargain, especially when measured against the ETF of ordinary retail stocks (with a valuation of 6.0) and the S&P 500 (with a price to tangible book ratio of only 4.6). You may reconcile yourself to pay more for an iconic leather handbag, but probably not for a stock in your investment portfolio. The legendary Benjamin Graham, the father of value investing, once said that in the short run the stock market is a voting machine, but in the long run, it’s a weighing machine. Well, today the weighing machine is showing that stocks of luxury brands like Burberry, Louis Vuitton and Ferragamo are coming up short. That is likely to set off alarm bells among those who monitor the health of the global economy; problems for this group of retailers, with their heavy reliance on markets like China and Japan, may well signal that that economic growth, as the IMF recently suggested, may not be as robust as previously anticipated. Certainly, if you’re shopping for some retail stocks to add to your portfolio, you may find better valuation and market performance among a more everyday group of companies.