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Tag: slow

  • Chanel profit tumbles as global sales slow down

    Chanel profit tumbles as global sales slow down

    Despite witnessing a 4.3% slide in sales last year, French luxury conglomerate Chanel has committed to maintaining its heightened capital expenditure this year. The persistence of market instability, especially in Asia and the U.S., has not deterred the company from supporting its worldwide expansion plans.

    Investments and Expansions

    Chanel announced that it would continue its capital investment at the $1.8 billion mark, representing a 43% increase from the previous year, to facilitate global growth. The expansion includes 48 new store launches scheduled for this year. About half of these planned openings will occur in China and the U.S., while additional locations are set for India, Mexico, and Canada. Out of these new stores, only six will be dedicated to fashion. The remaining stores will focus on beauty, jewelry, and other categories.

    Financial Performance

    The fiscal year ending in December saw Chanel reporting revenues of $18.7 billion. However, there was a 30% decrease in operating profit. The Asia-Pacific region was notably impacted, registering a 9.3% drop in sales. North and South America also experienced a decline of 4.3%, while Europe had a modest increase of 1.2%.

    The group’s net profit decreased by 28.2% to $3.4 billion last year. This decline was attributed to difficult market conditions in certain regions.

    Market Uncertainties

    Philippe Blondiaux, the group’s Chief Financial Officer, recognized uncertainties in the market outlook, particularly concerning China and U.S. tariff policies. He noted that while there were “positive signs of stabilization” in China and Hong Kong, it was premature to determine whether these regions were on the road to recovery. He further described the ongoing tariff discussions in the U.S. as “extremely volatile”.

    Chanel increased its prices by approximately 3% last year to counter inflation. Blondiaux stated that further adjustments might be required, especially in the jewelry sector where gold prices continue to escalate.

    Looking Forward

    Despite the challenging macroeconomic and geopolitical climate, Chanel’s global CEO Leena Nair remains optimistic. She stated that while these conditions have impacted sales in some markets, the company continues to focus on long-term investments.

    Last year, Chanel appointed Matthieu Blazy as its creative director. Although there have been rumors regarding an expansion into menswear, the company clarified that there are presently no plans to venture into that category.

    Questions & Answers

    What is Chanel’s strategy in terms of capital investment?
    Chanel plans to maintain its $1.8 billion capital investment to support its global expansion.

    How did Chanel’s financial performance fare in the previous fiscal year?
    For the fiscal year ending in December, Chanel reported a revenue of $18.7 billion. However, both operating profit and net profit saw significant declines, by 30% and 28.2% respectively.

    What are Chanel’s expansion plans for the current year?
    Chanel intends to open 48 new stores across various countries, including China, the U.S., India, Mexico, and Canada. The majority of these stores will be dedicated to beauty, jewelry, and other categories.

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  • Asos shares tumble as growth slows

    Asos shares tumble as growth slows

    Online fashion-retailer Asos reported sales growth beneath expectations for the four months to June, spooking investors and causing its share price to tumble 13 per cent overnight.

    That was despite a 14 per cent increase in sales in what CEO Nick Beighton described as a more competitive market.

    The slowdown has been attributed to operational changes, essential for the retailer to continue expanding internationally.

    “Asos is capable of a lot more,” said Beighton. “We have identified a number of things we can do better and are taking action accordingly. We are confident of an improved performance in the second half and are not changing our guidance for the year.

    “We are nearing the end of a major [capital expenditure] program. Whilst this has inevitably involved significant disruption and transition costs, the global capability it now provides us gives us increased confidence in our ability to continue to capture market share whilst restoring profitability and accelerating free cash flow generation,” he said.

    Sofie Willmott, lead analyst at GlobalData, said Asos has been able to deliver consistent double-digit top-line growth in recent years due to increased warehouse capacity and improved logistics processes, and the changes being made to US and EU distribution centres are vital to facilitate long-term growth in these key markets.

    “Asos will need to focus on winning back disappointed shoppers by bolstering its marketing efforts. Though this may need to include discounts, by recovering customers quickly they will not be lost forever.”

    She said Asos continues to innovate and introduce new tools to drive conversion and adapt to its demanding young shopper base, such as its recently added responsible filter.

    “However despite strong UK growth, with 62.6 per cent of retail sales coming from international markets, a robust UK performance is not enough to protect top line results.”

    “The future remains bright for Asos. The retailer’s agility and willingness to change to remain relevant to its customer base will help it to continue gaining market share both at home and abroad.”

    Beighton said the global online fashion market is worth more than £220 billion and growing fast.

    “We now have the tech platform, the infrastructure, a constant conversation with our growing customer base who love our own great product and the constantly evolving edit of brands we present to them. We believe that ultimately there will only be a handful of companies with truly global scale in this market.

    “We are determined that Asos will be one of them.”

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  • HTC’s April Revenue Figures Still Low Despite Efforts

    HTC’s April Revenue Figures Still Low Despite Efforts

    HTC had a pretty rough start to 2019 with record-low revenue numbers in both January and February. Nevertheless, things then started to look more positive in March as HTC’s sales increased dramatically thanks to the popularity of its VR headsets. But as revealed by the company’s latest figures, this resurgence was short-lived.

    Between April 1st and April 30th, HTC generated a total of NT$0.59 billion ($19.07 billion) in revenue. It’s unclear how this figure is split between smartphone and VR sales, but it, unfortunately, represents yet another record-low for the HTC One creators. Comparing the results to previous ones, April’s numbers translate into a big 54.85% month-on-month drop from the NT$1.31 billion ($42.46 billion) it generated in March and also amount to an even bigger 71.77% year-on-year decline.

    Way back in December, HTC stated that its focus for 2019 would be turning a profit and regaining its market share in the smartphone segment. So far, though, the Taiwan-based company has done little to achieve this with zero launches since December and no devices on the horizon. HTC has, however, released the Vive Focus Plus VR headset and launched its Viveport Infinity subscription service.

    Looking to the second half of 2019, HTC is largely expected to announce its first 5G flagship smartphone. Presumably, this will be available to purchase through multiple carriers and will provide a decent boost to the company’s finances. Additionally, rumor has it HTC is negotiating a brand licensing deal in India which could prove beneficial too.

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  • The Lipstick Effect drives South Korea cosmetics sales

    The Lipstick Effect drives South Korea cosmetics sales

    The Lipstick Effect has seen a rise in cosmetics sales despite South Korea’s economic downturn of 2018. The term The Lipstick Effect describes the phenomenon whereby colour cosmetics sales surge during a recession as consumers turn to small-ticket luxuries to lighten their mood.

    Major South Korean health and beauty retailer Olive Young saw a 35 per cent jump in colour cosmetics sales last year – the first time this product range has topped its best-selling category list – as the country struggled with sluggish job markets, conservative corporate investment and overall low consumer spending. Health functional food and hair products grew 32 per cent and 22 per cent respectively over the period.

    The outlook for cosmetics sales looks similarly bright this year as the rest of the South Korean economy is expected to wallow at 2018 levels.

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  • Internet in Việt Nam expected to be slow until Tết

    Internet in Việt Nam expected to be slow until Tết

    Internet connectivity in Việt Nam will remain slow for the next two weeks. The Asia-America Gateway (AAG) submarine cable broke once again on Sunday, causing bandwidth loss from Việt Nam to Hong Kong, Singapore and the US.

    The line that snapped on Sunday was 98 kilometres off the coast of southern Bà Rịa-Vũng Tàu Province.

    The repair ship will not be able to access the waters where the damaged cable is located till January 23, VietnamPlus reports.

    Welding is expected to start on January 25 and last until January 28.

    The cable will be buried and the connection will recover by January 29. However, the repairs may last longer if the weather is bad.

    In 2016, the 20,000km-long AAG cable was disrupted four times and maintenance work had to be undertaken in March, June, August and September.

    The AAG, one of the four intercontinental internet cable systems of Việt Nam and the largest, is used by major local providers, namely, FPT Telecom, VNPT, Viettel and SPT.

    The AAG cable came into use in November 2009, directly connecting Southeast Asia and the United States. It also links Southeast Asia with Europe, Australia and Africa.

    Previously, the Intra Asia cable system snapped and the damage was spotted near Hong Kong on Tuesday. However, the issue was resolved the same day.

    However, the system faced trouble again on Wednesday causing discontinuation in connection from Việt Nam to Hong Kong, Singapore and the US, affecting Internet speed in Việt Nam.

    Network providers will expand transmission channels to ensure connectivity this year. The Asia-Pacific Gateway undersea cable system is expected to help double the country’s internet traffic to other countries.

    The Asia Africa Euro 1, connecting Asian countries to Europe and Africa, is also under construction and is expected to become operational this year.

     

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