British luxury shoes brand Jimmy Choo (CHOO) struts in with a surprisingly robust 2015 year-end update and an outlook statement that contains a bit of swagger.
Despite the well-documented headwinds battering the global luxury industry, the red carpet favourite reports another year of record sales and says it successfully reversed a first half decline in the wholesale business too.
As outlined in this week's Personal Goods sector report, luxury goods stocks are largely out of vogue due to the impact on the industry of China's slowdown. In this context, Jimmy Choo's update represents a positive surprise, the iconic luxury shoe specialist beating expectations by flagging 7% constant currency revenue growth to £318 million.
This reflects 9% growth to £208 million in retail, boosted by store renovations and new store openings, with wholesale revenues edging 1% higher to £100 million.
Jimmy Choo's resilient, record sales haul was driven by the shoes category and by growth in Asia and Japan; the company also grew in Europe, despite the negative impact of the loss of Russian visitors and recent terrorist events in Paris.
Chairman Peter Harf claims 'Jimmy Choo continues to outpace the sector despite the challenging competitive environment' and says the company 'successfully reversed the first half decline in wholesale revenues and is on track with growth forecasts in Asia and Japan where brand awareness continues to grow strongly.'
Credit for the growing global appeal of the brand goes to Creative Director Sandra Choi (pictured below), whose designs have been well-received by fashion critics and shoppers, both female and male, alike.
Significantly, men's shoes remained the fastest growing category as Jimmy Choo successfully tapped into the ‘men-isation’ trend, while the retailer also generated strong growth in licence income and 'excellent progress in sunglasses and eyewear'.
Investors are also reassured by the upbeat tenor of the outlook statement. The company looks confident in its ability to grow faster than the market and progress its top-line in Asia, where the brand is under-penetrated.
This is a rare quality in the luxury sector and suggests Jimmy Choo can grow for years to come off this low base.
Shares also believes Jimmy Choo, whose shares nudge up 1.1p to 128.4p, could become a bid target in time. Private equity outfit Cinven's acquisition (14 Dec) of luxury women's footwear retailer Kurt Geiger demonstrates how brands with international allure, a proven track record of consistent growth and high cash conversion remain highly prized.
