REPORT Announcing unaudited results for the six months ended June 30, 2015, Jimmy Choo said its constant currency revenue growth of 6.5 percent or 5.5 percent at reported rates was driven by retail, which now represents 62.9 percent of revenues.
Commenting on the first half performance, Pierre Denis, Chief Executive Officer, said, “We are pleased with our performance in H1, considering materially lower industry growth in the low single digits. Jimmy Choo continued to deliver well in this environment and ahead of the market, with net revenue growth of 6.5 percent for the half. Our unique DNA and our collections have maintained their resonance with our clients.”
Financial highlights of the first half
Retail growth of 10.3 percent at constant currency and 9.6 percent at reported rates was driven by a mix of like for like (LFL) of 3.3 percent and new space growth, including new stores and the shift of the stores in Singapore and Malaysia into retail from wholesale.
LFL was impacted by the temporary closure of a number of stores for renovation in the first half, especially Sloane Street. Renovated stores in the new store concept continue to perform particularly strongly. The disruption caused by the renovation process is more than outweighed by the benefit to the brand perception of the in-store experience and the subsequent uplift in sales growth.
First half wholesale revenue, which declined by 3.9 percent at constant currency and by 5.1 percent at reported rates, including the transfer of the franchise stores in Singapore and Malaysia to retail, as well as by the structural change in supply chain as a result of the move to the central warehouse in Switzerland which caused a one-time shift in wholesale delivery timing. The currency dynamic driving client travelling behaviour, in addition to the continuing economic and political issues in Greece, Eastern Europe and Russia impacted local demand in certain markets. While these phenomena impacted both retail and wholesale, the relative geographical positioning of the two networks resulted in a more pronounced impact in wholesale.
Licensing grew by 50.5 percent at constant currency and 45.3 percent at reported rates. Both eyewear and fragrance continued to grow strongly, with Jimmy Choo Man launched in June 2014, a particular stand out performer.
Regions drive H1 growth
Asia ex-Japan remains the strongest growth region, with two store openings and three conversions complementing continued strong underlying growth. This growth of 34.5 percent was achieved despite Hong Kong revenue being broadly flat as tourist flows in the region were materially down year on year. Japan grew by 20.5 percent with the strong performance of store network benefitting from Chinese tourist traffic.
EMEA revenues were adversely impacted by the depreciation of the Euro against Sterling, however, underlying constant currency performance remains solid despite the decline in Russian tourist traffic seen since the early part of 2014 and the temporary closure of Sloane Street for renovation. EMEA benefitted from tourist inflows from China, which is now the company’s largest tourist group. Growth of 5.1percent in the Americas benefits from a strong US dollar, with weaker underlying performance impacted by reduced tourism and increased competition.
Gross margin improved from 61.4 percent in the prior year to 62.7 percent, driven by increased buying volumes and the favourable shift in channel mix. The ongoing mix shift from wholesale to retail also reflected the structural shift in wholesale delivery timing. In addition, gross margin benefitted from the weakness of the Euro against other currencies during the period, with the effect more pronounced in wholesale than retail due to the longer selling window for retail. H1 2015 Adjusted EBITDA grew modestly by 0.5 percent compared to the H1 2014. H1 2015 Adjusted EBIT reduced by 6.3 percent compared to the prior year.
Outlook positive, new board additions
With brand and collections continuing to resonate with the clients, against the backdrop of uncertain and challenging markets, the company expects the benefits of store development to build in H2, while the impact of changes to tourism is expected to continue to affect the retail business as it has in H1. Jimmy Choo would continue to renovate or relocate 10-15 stores and open 10- 15 new stores in the full year.
On August 1, 2015 the Group appointed Meribeth Parker as an independent Non-Executive Director. Meribeth Parker was formerly Group Publishing Director of Hearst Magazines until the end of June 2015 and previously held a variety of senior roles in publishing. On the same date, Anna-Lena Kamenetzky was appointed as a non-executive director replacing Bart Becht who informed the board of directors of the Group of his intention to step down following the announcement of his continued involvement as Chairman and interim CEO of Coty Inc. Anna-Lena Kamenetzky is a partner and head of corporate development of JAB Holding Company.