Virtua Weekly: The Breaking News From Our Sectors This Week!
Welcome back to Virtua Weekly, where we break down the biggest stories emerging from the sports, fashion & outdoor industries each week!
Here's what you need to know:
In the third quarter of 2023, 阿迪达斯 experienced a 1% increase in currency-neutral revenues, attributing the growth to expansion in all regions except North America. The company's strategic focus on conservative sell-in and emphasizing full-price sales contributed to a 0.2 percentage points rise in gross margin to 49.3%. Factors such as reduced freight costs, a favourable business mix, and lower inventory allowances played a role in this improvement. Operating profit for the quarter amounted to €409 million, which included extraordinary expenses of approximately €110 million.
Adidas CEO Bj?rn Gulden highlighted positive developments, particularly in the Lifestyle business, where strong demand for products like the Terrace range (Samba, Gazelle, Spezial) and Campus contributed to growth. The company's inventory levels, a key focus of their conservative sell-in strategy, improved significantly, showing a 23% decrease year-over-year to €4.8 billion.
Gulden acknowledged the need for continued improvement but expressed optimism about the progress being made. He mentioned the successful launch of new products, such as the Adizero Adios Pro Evo 1 shoe, and highlighted the positive impact of the Originals campaign. Gulden also emphasized the company's commitment to reducing discounts, increasing full-price sales, and balancing brand building with commercial success in their direct-to-consumer (DTC) business.
Forward Looking
Looking ahead to Q4 and beyond, Gulden outlined the company's priorities and the foundation they aim to lay for an improved 2024 and successful 2025 and 2026. Despite recognizing the need for more time to build the brand back to its peak, Gulden expressed confidence in the progress being made, citing the right attitude within the teams and accelerated decision-making processes.
For the first nine months of 2023, Adidas reported flat currency-neutral revenues, but excluding Yeezy revenues, there was a 3% increase. The gross margin declined to 48.4%, influenced by negative currency movements and promotional activities. Operating profit for this period was €646 million, inclusive of Yeezy-related gains and one-off costs related to the ongoing strategic review. Inventory management initiatives resulted in a substantial 23% YoY decrease in inventories, and adjusted net borrowings declined to €5.235 billion.
Looking ahead to the remainder of 2023, Adidas expects a low-single-digit decline in revenues, factoring in macroeconomic challenges, geopolitical tensions, and their initiatives to reduce high inventory levels. The underlying operating profit is anticipated to reach around €100 million, while reported operating loss is expected to be around €100 million, including Yeezy-related impacts and strategic review costs.
“In the third quarter, we achieved several critical milestones as we took decisive action to stabilize and transform the Company, while delivering revenue and earnings in-line with our expectations,” said Chris Hufnagel, President and Chief Executive Officer of Wolverine Worldwide. “We continued to reshape our portfolio, reduce our inventory, and redesign the Company to become consumer-obsessed brand builders – focused squarely on building compelling products and telling amazing stories. We announced additional details on these actions in another press release this morning.
While market conditions remain challenging, we're taking the necessary steps to reinvigorate our brands and position the Company for profitable growth as conditions improve. We're confident in our brands, platforms, and most importantly, our people. We're executing more boldly and at a greater pace to improve our profitability and enable future investments focused on our biggest growth opportunities – all aimed at delivering greater value for our shareholders.”
Key figures:
Revenue of $527.7 million declined 23.7% versus the prior year and declined 24.7% on a constant currency basis. Revenue from the ongoing business was $519.5 million and declined 21.1% on a constant currency basis.
The Company's international revenue of $229.0 million was down 24.4% compared to the prior year and international revenue from the ongoing business of $221.8 million was down 22.3% compared to the prior year, or 24.6% on a constant currency basis. Direct-to-Consumer revenue of $136.6 million was down 14.5% compared to the prior year and down 12.8% for the ongoing business compared to the prior year.
Gross margin was 40.8% compared to 40.2% in the prior year and improved due to profit improvement initiatives and channel mix, partially offset by the sale of higher-cost inventory due to transitory supply chain costs from 2022 and higher mix of closeout sales in the quarter.
Selling, General & Administrative expenses were $188.1 million, or 35.6% of revenue. Adjusted SG&A expenses of $191.7 million or 36.9% of adjusted revenue, were 510 basis points higher than the prior year.
Inventory at the end of the quarter was $563.8 million and was down approximately 33% compared to the prior year.
Actions to Streamline the Organization, Strengthen Brand-Building Capabilities, and Reduce Cost:
添柏岚 Global Brand President Susie Mulder is exiting the company.
Mulder, who assumed the role in April 2021, revealed her departure internally this week. Nina Flood, the VP and GM of Timberland EMEA, will step in to take the helm of the brand on an interim basis, the company confirmed.
“After two and a half years, Susie has announced she will be leaving VF to pursue a new opportunity. Susie made many contributions during her time with the brand, and leaves a strong foundation, strategy and leadership team to move the brand and business forward,” Colin Wheeler, VP of corporate affairs and communications at VF Corporation .
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Wheeler added that Flood is the right person to take the interim role. “Nina has been a successful leader at VF for 20 years, within various leadership roles including president of Global Packs (Eastpak,?JanSport?and?Kipling) before taking the helm at Timberland EMEA earlier this year,” Wheeler said.
The executive’s departure comes at a time of struggle for parent VF Corp., which is facing pressure from two activist investors. Amid a weak fiscal Q2 earnings report and forecast, Timberland sales fell 7% during the period (10% on a constant currency basis). WWD reported that investors could be interested in snapping up Timberland as VF spins off some labels.
Mulder’s exit is the latest of several leadership departures for the challenged company. For instance, long-time VF veteran Steve Rendle surprisingly announced his decision to retire from his position as chairman, president and CEO in December 2022. (Bracken Darrell was announced as president and CEO in June.)
As for other VF brands, the company announced last month that Vans , global brand president Kevin Bailey —?who joined in 2002 and returned to the helm last year after holding other roles at the parent company —?was stepping down.
BIRKENSTOCK has appointed Tiffany Wu as Managing Director Greater China, effective November 1, 2023. In this newly created position, Wu will lead the Greater China business area, which includes mainland China, Hong Kong and Taiwan, driving brand equity and sales in the region. She reports to Klaus Baumann, Chief Sales Officer of the BIRKENSTOCK Group.
With the new appointment the Germany-based revered global zeitgeist and purpose brand aims to further strengthen the company’s expanding footprint in the most dynamic region in Asia Pacific and the growth region with the largest untapped white space potential for the company, alongside India and Japan. Today, BIRKENSTOCK operates a rapidly growing e-commerce business in China, which will be supplemented by a strong owned retail presence and a healthy wholesale business with select local partners.
WELL-ROUNDED AND PASSIONATE LEADER WITH PREMIUM FASHION AND LUXURY EXPERTISE
Wu is a well-rounded and passionate leader. With over 18 years of premium fashion and luxury end-to-end omni-channel expertise in China and acute brand sense, Wu is an expert in driving brands’ commercial strategy, omni channel expansion, brand building and storytelling through China’s ever-changing digital landscape along with a strong marketing and PR foundation.
As a compassionate brand expert, who likes to create things from the ground up, Wu embraces her new career step: “BIRKENSTOCK’s growth potential is enormous in this market. In fact, the current timing is very favourable for our brand, because since Covid, the Chinese have become more health-conscious, and young people want to protect the environment. Our products meet these expectations perfectly.
As we ramp up our production capacity, we will unlock the large growth potential of China and the whole the APMA region, which has generated significant latent demand that we have been unable to fulfil in recent years given more limited supply. Our targeted growth strategies will build upon our growing popularity in the region’s underdeveloped markets, including China, where our brand is nascent.”
Outerwear specialist Patagonia has unveiled a new repair centre in London, established alongside social impact companies United Repair Centre (URC) and Fashion Enter.
The location’s goal is focused around making repairs more accessible, allowing other brands to also participate while also contributing to the local job market.
Clothing manufacturer Fashion Enter will train the centre’s team on-site in regards to technical repairs, with URC to then take on carrying out repairs for Patagonia’s UK customers, as well as three more brands that are expected to join the initiative within the next year.
The opening follows URC’s launch of a repair centre in Amsterdam, where it teamed up with Makers Unite, the Amsterdam Economic Board and Patagonia and now handles 30,000 repairs per year, according to a press release.
The firm noted that its London base is also striving to achieve the same capacity of repairs per year by 2025.
In a release, CEO and founder of URC, Thami Schweichler, said: "The clothing industry has a bad reputation for harming the environment and the people who make our clothing - but it doesn't have to be that way. We have to support customers.
“We want to help people wear their clothes longer and consume consciously in the future if we want to have a vibrant planet to do business in. With the launch of URC London, we are making it easy for responsible clothing brands to join the growing repair movement.”
Virtua are delighted to announce a new opportunity has arisen for one our long-standing clients, a multifunctional sports/lifestyle brand to join them as their next Brand Marketing Manager. This position will be responsible for creating and executing our clients brand marketing vision across product, partnerships, launches, campaigns, social media, influencers and brand activations.
We’re looking for a bright, energetic individual, with a strong track record in sales support to assist our Amsterdam Digital Hub General Manager and support on all research & sourcing activity, working closely with our clients in our existing markets of operation.
Virtua are delighted to bring to market a highly anticipated role for a new client, a global fashion powerhouse with years of impressive heritage, to join them as its new Channel Marketplace Manager within their digital team.
Virtua are delighted to bring to market a highly anticipated role for a new client, a global fashion powerhouse with years of impressive heritage, to join them as its new E-commerce Planning Manager within their digital team.