Marca Studio

Performance Updates From Major Fashion Brands

Performance Updates From Major Fashion Brands

Assessing the performance of major fashion brands is something every business in the industry should do. This is the case whether you’re involved in London’s fashion industry, further afield or at an international level as it helps to understand trends, challenges potential clients face and whether you need to shift approach to protect your own business.

Today we’re going to look at the latest announcements from three major brands. With a mixed picture, it is interesting to note that not everything is doom and gloom, yet there is no denying that tough times are ahead.

Challenging times at Adidas

The headlines at Adidas don’t paint a very good picture. Having reported a 28% fall in operating profit for the second quarter of 2022, the business is clearly suffering from supply chain costs increasing, and lockdowns relating to COVID in its manufacturing centres of China and Vietnam. Throw in suspending Russian business activities and you can see how serious the challenges are.

What about the different markets?

If we look deeper into the results, it is not all such a negative picture. Adidas has seen double-digit growth in e-commerce, doing particularly well in the football and outdoor niches. Despite challenges faced by lockdowns in Asia, western markets have driven growth in revenue including 21% growth in North America and 37% in Latin America.

Looking at the bigger picture of the entire 2022, Adidas recently lowered its financial outlook as a result of the continued challenges in China. They expect the net income for 2022 to be approximately £1.09 billion.

Summer fun for Next

A ray of sunshine in a rather gloomy article now, thanks to the performance of retail giant Next. Thanks to Q2 sales exceeding expectations, it has increased its guidance on the full year’s profit by 5%. This means they estimate the company will reach an impressive £860 million.

So why the good news?

Looking deeper at the figures, we can see that total sales have increased by 5% over the three-month period of May, June and July this year when we compare it to last year. This is a massive 23.8% increase compared to 2019 prior to the pandemic and Next put this down to a desire for customers to return to the traditional stores.

Interestingly, formal wear has generated much of this retail boost as more people are now attending work events and celebrations after so long of staying home in lockdown.

Under Armour lowers its forecasts

The last of our three big brands to update their forecasts are Under Armour and sadly, they mirror Adidas in presenting a rather negative outlook. Its reduced forecast for annual profit has been linked to the cost of raw materials increasing significantly and the necessity to offer bigger promotions to win customers back.

If we look at some of the numbers, their direct-to-consumer revenue dropped by 7% and e-commerce by 6%, significant numbers for such a large organisation. Under Armour has stated that they expect earnings per share for 2022 to range between 61 and 67 cents, falling from a previous guide of 79 to 84 cents.

Read Comments

Leave a comment