It’s all the Lydians’ fault. The Lydians were a people who lived in what’s now Eastern Turkey in the second millennium BC. Herodotus, writing around 450 BC, tells us this about them:
“…the Lydians lived their lives in a way not dissimilar to the Greeks. So far as we know they were the first people ever to strike gold and silver coins, and to use them: the result was the invention of shopping.”
Globe published its results for the six months ended December 31st on February 21st and I missed it. Better late than never I guess.
Happily for Globe, its largest market in Australasia was strong because revenues in Europe and North American (NA) were down pretty dramatically. Total revenues fell 10.6% from $79.1 in the six months last year to $70.7 million Australian dollars in this year’s six months. (all dollar numbers are Australian). Australasia revenue, representing 58.4% of total revenue, rose 15.5% from $35.7 to $41.3 million.
I’m always grateful when a company has a short 10K and conference call. I’m efficient at spotting the meat in a 10K, but it’s easier when it’s 77 pages, as Zumiez’s was, instead of 177 pages. Though when it’s 177 pages, there’s usually some really interesting stuff.
Zumiez doesn’t need more than 77 pages. They pursue the general strategy they’ve pursued since the company was founded, they make money, and their balance sheet is fine. They are dealing with the same crappy retail and economic environment everybody else is, they are impacted by it, and they are cautious about the future. Ho hum.
It’s accurate to say that VF ran into the same issues and economic dislocations as other brands and retailers. During their fourth quarter, ended December 31, 2016, revenues fell 2.7% from $3.41 billion to $3.32 billion in the quarter ended December 31, 2015 (the prior calendar period- PCP). Net income was also down from $312 to $264 million, or by 16.7%.
For the year, revenue was almost the same at just over $12 billion. Net income fell 12.8% from $1.32 in 2016 to $1.07 billion in 2015 (also the PCP). More details and nuance later. I wanted you to have those numbers as we talk strategy.
Six months ago, reporting on Billabong’s results for the whole year, I said this was a challenging turnaround, Billabong was doing things right, they were starting to see results, but the market was tough, and implementing their plan was taking longer and costing more (perhaps because it’s taking longer) than they’d initially expected.
That’s all still true for the six months ended December 31, 2016.
I’ll start with the numbers as reported (numbers in Australian dollars).
Let’s just jump right to a comment CEO Nick Woodman made during the conference call.
“I would say that we are more focused on revenue and margin and less focused on volume on a unit basis.”
That sounds to me like GoPro is more interested in the higher end of the market. And they should be. But if that’s their focus (I happen to think it should be, but dare I call it a niche?) is there enough revenue growth to satisfy the requirements of being a public company?
It was, I think, a couple of years ago when I said, 3D printing of various products is on its way. I suggested maybe getting a 3D printer for a few thousand bucks and experimenting with it. Maybe print some key chains or stuff like that. The responses were along the lines of “Oh, sure, someday.”
Last week was spent in Arizona on an annual excursion with old friends playing golf. In my case, bad golf. There may also have been a cocktail or two involved. Anyway, as I left, GoPro came out with its 10K annual report and, while I was gone, Billabong reported its half yearly numbers. So I’m behind.
But before I dig into those many pages of small print, my research department has sent me an article on Nordstrom that is worth a few words.
Life was simpler when I wrote my first article on trade shows in the mid-90s. We went to trade shows because it was the only place to see, and to make, complete product presentations, and discover new, meaningful, features and products. There were also a lot more specialty retailers. The shows were the only place they and brands could efficiently connect and do business- by which I mean write orders.
All that’s changed. It’s not that it doesn’t still go on, but it doesn’t have to happen at trade shows like it used to. There are other choices caused by consolidation, the internet, and changing consumer behavior.
I’ve reviewed Deckers’ 10Q for the three months ended December 31, 2016 and their conference call. The company earned $41 million on sales of $760 million in the quarter, which isn’t bad. But that’s down from net income of $157 million on revenues of $796 million in the same quarter last year.
The problem? I’m sure regular readers already know. Yup, it’s mostly Sanuk again. But’s let start at the company’s top line.
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