Luxury brands should stay privately held

August 28, 2024 Leave a comment

In the #luxury brand business, unless you are consolidator or conglomerate, it’s probably best to stay private.

Giorgio Armani S.p.A. has remained private.

Almost, all others have not.

Years ago, the Salvatore #Ferragamo stock price was a EUR 30, now its trading at EUR 7.50.

Much of this isn’t surprising.

Within 7 years, the company has moved from having EUR 131 in net cash to now holding EUR 485 million of debt, while it continues to carry inventory equivalent to 30% of its sales.

From EUR 1 billion of revenue, it has an EBIT of EUR 57 million and only booking a net profit of EUR 9 million.

(that’s a net margin of below 1%)

With 72.5% of its shares are closely held, all ‘they’ need to find approx. EUR 500 million and buy the 45.5 million free floating shares and go private.

Otherwise……..

August 28, 2024

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , ,

A rare luxurious moment

August 7, 2024 Leave a comment

It’s been 16 years since the stock price of LVMH simultaneously traded below its 200 week moving average and registering a weekly oversold reading.

August 7, 2024

by Rob Zdravevski

rob@karriasset.com.au

#luxury

Screenshot

Filed under Finance & Investment Tagged with ,

Differences in luxury

July 26, 2024 Leave a comment

Not all luxury companies are being run the same way

There is one company which owns some significant luxury brands;

whose net debt amounts to 41% of its market capitalisation,

has increasing inventories and now equal to 23% of its annual revenue;

where its receivables are rising,

its net interest expense soaks up 15% of its EBIT.

and 82% of its net income leaves the corporation, in the form as dividends.

It’s one thing to suggest weaker business conditions as a result of slowing consumer demand, but when quickly looking at the ‘numbers’, it’s easy to understand why the stock price has halved over the past 18 months.

It’ll be cheap at some point.

Filed under Finance & Investment Tagged with , , , , , ,

A safer moment to buy luxury

January 24, 2024 Leave a comment

For nearly 3 years, long term (the buy and hold type) investors had little business owning their #LVMH shares.

Soon, we should see a better (and safer) opportunity to acquire.

January 24, 2023

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with ,

Even the greats are susceptible

October 18, 2023 Leave a comment

Whether we categorise it as mean reversion or mean convergence, the probability of it occurring doesn’t exempt the great companies of the world from it either.

It’s a little reminder to check where you are and what you are doing as an investor at various points of the pendulum.

Below, you’ll see the stock price of LVMH, perhaps completing it’s path back to shaking out the un-natural owners of its stock.

October 18, 2023

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with ,