Latest news with #AdamCochrane
CNBC
4 days ago
- Business
- CNBC
Luxury shopper recovery faces four key headwinds
High-end spenders are painting a mixed picture when it comes to the luxury market's long-awaited recovery, with softer sales still weighing on company forecasts. But better-than-feared results from bellwether fashion house LVMH moved luxury stocks higher Friday, as investors bet on the emergence of green shoots of recovery. LVMH posted a 4% year-on-year drop in second quarter sales to 19.5 billion euros after the market close Thursday, slightly below a consensus forecast for a 3% decline. "This was not a stellar quarter for LVMH," Deutsche Bank's Adam Cochrane, a luxury equity research analyst, wrote in a Friday note. "However, we see some glimmers of hope with a sequential improvement in cFX [constant currency] sales expected from 3Q onwards and most of the sales weakness related to weaker tourism." Here's a look at four key trends to look out for as earnings season rolls on, with fresh numbers due next week from Kering, Hermes and Prada. Foreign exchange fluctuations are a perennial concern for luxury firms, but that's even more the case this quarter as they face high comparable sales from last year. A sharp decline in the Japanese yen sparked a surge in tourist flows and luxury shopping in the country in 2024. But now brands are battling a rebalancing. Richemont saw sales in Japan drop 15% year-on-year in the three months to June, following a 59% jump over the same period the year prior. Burberry also cited a "challenging performance" in Japan in the second quarter, and Moncler said Japan was its only negative-performing Asia market — both without providing specific figures. Some firms noted, however, that a downturn in tourism to Japan — and to a lesser extent Europe — has resulted in an uptick in domestic spending in certain other markets. "[In China] we have seen tangible improvement locally," said LVMH's Chief Financial Officer Cécile Cabanis during an earnings call Thursday, citing a "repatriation from the big drop we've seen in tourism to Japan." Several luxury firms have also pointed to a strengthening of U.S. sales in the second quarter, even as consumers wait with bated breath for the impact of tariffs. Burberry, Richemont, Moncler and Brunello Cucinelli all reported increased sales in their American markets over the second quarter, while LVMH noted that American demand was "broadly unchanged." Still, the extent to which that uptick is driven by U.S. customers frontloading purchases ahead of the full onset of tariffs is not yet clear, according to the firms. "To tell you that this was driven by an anticipation of buying links to the tariffs? Honestly, I cannot tell you," Roberto Eggs, Moncler's chief business strategy and global market officer, said on an earnings call Wednesday. Luxury companies have also been honing in on the U.S. market in recent quarters in a bid to compensate for continued soft demand in the key Chinese market. Burberry CEO Joshua Schulman said the company's recent U.S. growth indicated the "diversity of the luxury consumer that exists in that market," from elite, high-spenders to high-traffic mall shoppers. U.S. tariffs are nonetheless weighing on the outlook for most European luxury houses, who rely heavily on localized production as part of their cache. As such, many have suggested that they will need to raise prices in the coming quarters to offset added costs. Brunello Cucinelli flagged price hikes of 3% to 4% in the U.S. while Moncler said it was implementing "mid-single-digit" percentage increases for the coming 12 months. Burberry, meanwhile, said it began adjusting prices last year as part of broader overhaul plans. LVMH, on the other hand, said Thursday that prices rises would need to come with an "improvement in the product" or modest rebalancing around inflation. However, the French luxury conglomerate then went on to cite price hikes among "several levers" at its disposal to counter the impact of tariffs. It comes as the cost of luxury goods has risen by an average of 3% so far this year — the slowest pace since 2019 — according to UBS' evidence lab, as brands have sought to reconcile consumer retention with higher input costs following a Covid-era surge in prices. Finally, category mix remains a fundamental factor in the divided luxury picture, with brand appeal playing as much of a role as the product type itself. Jewelry remains a winning play for Cartier-owner Richemont, even as high-end watches — both its own and those of other luxury watchmakers — remain a weak point. Tiffany-owner LVMH, however, continues to battle softness in its jewelry and fashion and leather goods maisons, despite leather handbags going from strength to strength for ultra-luxe brand Hermes. Carole Madjo, Barclays' head of European luxury goods research, told CNBC that she expects leather goods dominance to continue to play out when Hermes reports on Wednesday. "[Hermes] is always very good, thanks to leather goods mostly," she told "Squawk Box Europe" on Tuesday. Meanwhile, investors will be eagerly awaiting more color on Tuesday from Gucci-owner Kering on its product overhaul under artistic director Demna Gvasalia and incoming CEO Luca de Meo. "Bringing newness, something fresh which has not been seen before, is I think what could make Gucci great again," Madjo said.
Time of India
4 days ago
- Business
- Time of India
Puma caught between tariff fears and weak US demand as it discounts stock, plans price hikes
London: Puma faces a dilemma in the United States: after rushing shipments from Asia to beat incoming tariffs, the German sportswear brand is now discounting to clear stock, while planning to raise prices this year to offset rising costs. These conflicting pressures reflect a broader challenge for retailers trying to make sure U.S. shelves are stocked for the crucial back-to-school and holiday seasons, while looking to pass on higher costs through price increases at a time when demand is softening. Puma, which warned on Thursday that it expects an annual loss, said it was cutting orders and plans to raise prices in the fourth quarter to soften the impact of tariffs, which it estimates will take ₹80 million ($93.7 million) off its annual gross profit. "Elevated inventory levels on our balance sheet are leading to lower full price realisation," CFO Markus Neubrand told journalists on Friday. "In response, we've adjusted our future orders to better match expected demand." At the end of the second quarter, Puma's inventories were up 18.3% in currency-adjusted terms compared with the previous year, hitting 2.151 billion euros. The increase was mostly driven by North America, he said. But North America was also Puma's weakest region last quarter, with sales down 9.1% in currency-adjusted terms. Puma now expects global sales to fall this year by at least 10%, further heightening the inventory problem. "The idea to front load imports into the U.S. was a sensible tactical position given uncertainty, but it does come with the risk of increased discounting in a weak market," said Adam Cochrane at Deutsche Bank Research. Puma's plan to reduce orders should help bring inventories down, but also reflects weaker demand from retailers, Cochrane added.
Economic Times
5 days ago
- Business
- Economic Times
Puma caught between tariff fears and weak US demand as it discounts stock, plans price hikes
Synopsis Puma is grappling with the consequences of its earlier strategy to front-load shipments to the U.S. to avoid tariffs. This move has led to excess inventory and subsequent discounting, particularly in North America, where sales have declined. Reuters FILE PHOTO: A view of a logo at the PUMA flagship store in New York City, U.S., July 16, 2025. London: Puma faces a dilemma in the United States: after rushing shipments from Asia to beat incoming tariffs, the German sportswear brand is now discounting to clear stock, while planning to raise prices this year to offset rising conflicting pressures reflect a broader challenge for retailers trying to make sure U.S. shelves are stocked for the crucial back-to-school and holiday seasons, while looking to pass on higher costs through price increases at a time when demand is which warned on Thursday that it expects an annual loss, said it was cutting orders and plans to raise prices in the fourth quarter to soften the impact of tariffs, which it estimates will take ₹80 million ($93.7 million) off its annual gross profit."Elevated inventory levels on our balance sheet are leading to lower full price realisation," CFO Markus Neubrand told journalists on Friday. "In response, we've adjusted our future orders to better match expected demand."At the end of the second quarter, Puma's inventories were up 18.3% in currency-adjusted terms compared with the previous year, hitting 2.151 billion euros. The increase was mostly driven by North America, he said. But North America was also Puma's weakest region last quarter, with sales down 9.1% in currency-adjusted terms. Puma now expects global sales to fall this year by at least 10%, further heightening the inventory problem."The idea to front load imports into the U.S. was a sensible tactical position given uncertainty, but it does come with the risk of increased discounting in a weak market," said Adam Cochrane at Deutsche Bank plan to reduce orders should help bring inventories down, but also reflects weaker demand from retailers, Cochrane added.
Time of India
5 days ago
- Business
- Time of India
Puma caught between tariff fears and weak US demand as it discounts stock, plans price hikes
London: Puma faces a dilemma in the United States: after rushing shipments from Asia to beat incoming tariffs, the German sportswear brand is now discounting to clear stock, while planning to raise prices this year to offset rising costs. These conflicting pressures reflect a broader challenge for retailers trying to make sure U.S. shelves are stocked for the crucial back-to-school and holiday seasons, while looking to pass on higher costs through price increases at a time when demand is softening. Explore courses from Top Institutes in Please select course: Select a Course Category Technology Design Thinking MBA PGDM Project Management Data Science Degree Operations Management Management healthcare Product Management Others Public Policy Cybersecurity Data Science Leadership Finance Healthcare CXO MCA Data Analytics others Artificial Intelligence Digital Marketing Skills you'll gain: Duration: 12 Weeks MIT xPRO CERT-MIT XPRO Building AI Prod India Starts on undefined Get Details Puma, which warned on Thursday that it expects an annual loss, said it was cutting orders and plans to raise prices in the fourth quarter to soften the impact of tariffs, which it estimates will take ₹80 million ($93.7 million) off its annual gross profit. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Doctors Call These The 'Rolls-Royce' of Hearing Aids Hear True Learn More Undo "Elevated inventory levels on our balance sheet are leading to lower full price realisation," CFO Markus Neubrand told journalists on Friday. "In response, we've adjusted our future orders to better match expected demand." At the end of the second quarter, Puma's inventories were up 18.3% in currency-adjusted terms compared with the previous year, hitting 2.151 billion euros. The increase was mostly driven by North America, he said. Live Events But North America was also Puma's weakest region last quarter, with sales down 9.1% in currency-adjusted terms. Puma now expects global sales to fall this year by at least 10%, further heightening the inventory problem. "The idea to front load imports into the U.S. was a sensible tactical position given uncertainty, but it does come with the risk of increased discounting in a weak market," said Adam Cochrane at Deutsche Bank Research. Puma's plan to reduce orders should help bring inventories down, but also reflects weaker demand from retailers, Cochrane added.
Fashion Network
5 days ago
- Business
- Fashion Network
LVMH shares rise after mixed bag results with 'glimmers of hope'
Shares in French luxury group LVMH rose on Friday after the group reported quarterly results, with analysts pointing to hopes on the horizon as the group said it saw some signs of recovery in the key Chinese market. LVMH's quarterly sales for products like Louis Vuitton handbags, Dior dresses and Moet & Chandon champagne came in slightly below expectations, at 19.5 billion euros (22.88 billion dollars), down 4% year-on-year, with a 9% sales drop at the group's core leather and fashion division. After an initial dip at market open as investors grappled to get a reading of what Citi analysts called a "mixed bag" of results, LVMH shares steadily reversed course, trading 3.5% up midday and lifting sector peers Kering and Hermes. HSBC analysts said in a note that higher-than-expected profit margins were a sign the group has become more pragmatic and efficient under the leadership of CFO Cecile Cabanis, who was appointed at the end of 2024. Deutsche Bank analyst Adam Cochrane said that while the second-quarter results were not "stellar", there were some "glimmers of hope". "Investors have been waiting for an opportunity to revisit this stock and the conference call highlighted a number of factors which may encourage a tangible recovery in China, market share gains in key brands and potential for structural efficiencies as well as ongoing tight cost management", he wrote in a note. LVMH's finance chief on Thursday said the company saw some "tangible improvement" In China, where a real estate crisis has dampened appetite for luxury goods. French luxury heavyweights have been facing a prolonged downturn as brands also face the threat of U.S. import tariffs.
