Oddo BHF believes that growth was still remarkable in the 2nd quarter at nearly 13%, but EBIT margin was still down by nearly 200 bp over the 1st half.

Group sales came to ME 7,504 and EBIT to ME 3,148 in the 1st half, compared with Oddo BHF's estimate of ME 7,383 and ME 3,067 (a positive variance of almost 3%) and the FactSet pre-publication consensus of ME 7,488 and ME 3,189 (the EBIT variance is slightly negative).

Bags are driving growth, but more mass-market products are visibly slowing down, with Asia returning to growth of just 5% in Q2. Sequentially, cc growth is weakening due to Asia Pacific, which slowed significantly from +13.9% in Q1 to +5.5% in Q2, but the other geographies are showing a more favorable picture' indicates Oddo BHF.

The Americas region accelerated to +13.3% after +11.8% in Q1, as did Europe and France (France at +15.1% after +14.3% in Q1, Europe at 20.5% after 14.6% in Q1), while Japan continued its momentum at 19.5% after 25.2% in Q1'.

In terms of divisions, Leather Goods continued to post particularly strong growth in Q2 at 17.9% after 20.3% in Q1, but there was a more visible slowdown in Silks and Textiles (-5.6% after +7.9% in Q1) and Watches (-4.9% after +4.3% in Q1). Ready-to-wear Shoes and Accessories came out at +15.1% after +15.9% in Q1, despite the slowdown observed in Accessories", adds the analyst.

The Group is keeping its annual growth target for leather goods unchanged at c.+15%/+16%, which suggests a slowdown in Group growth for the 2nd half compared with the 1st half.

'These factors confirm our view that margins should continue to decline y/y in the 2nd half. For the year as a whole, we now expect organic sales growth of 13.1% versus 12.4% previously (2nd half at 11.2%) and an EBIT margin of 40.2%, reflecting a 2nd half at 38.4% versus 40.2% in H2 2023. For 2025, growth is raised slightly to 10.5% (previous 10%) to reflect a price increase that could exceed 3%, with the margin expected to remain unchanged at 40.3%'

Oddo BHF confirms its Neutral opinion and price target of E2,195. We remain slightly less optimistic than the consensus for the future. We believe that the 1st half results are beginning to reveal that part of the Group's business is very sensitive to the cycle, and that its margin cannot be maintained well above 40% in this context'.

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