Source: Company reports/Fung Global Retail & Technology

FY16 Results

Italian online fashion retailer YOOX Net-a-Porter reported net revenue growth of 12.4% year over year on a reported basis and growth of 17.7% at constant exchange rates. Revenues of €1,871 million were slightly below the consensus estimate of €1,875 million. The company’s FY16 gross margin contracted by 30 basis points year over year, to 39.2%, and its SG&A margin contracted by 70 basis points. The FY16 operating margin expanded by 80 basis points, to 5.2%.

Net Revenues by Business Line

Multibrand in-season product sales climbed 16.0% year over year on an organic basis, while multibrand off-season sales jumped 19.5% and online flagship store sales increased by 23.7%. Some 51.8% of the company’s revenue was derived from the multibrand in-season business. Including sales of TheCorner.com and ShoeScribe.com, which were discontinued at the end of August 2016, FY16 sales grew by 13.0% year over year at constant exchange rates. FY16 sales growth was driven by strong performance across all geographic regions. Year over year at constant exchange rates, Asia-Pacific sales increased by 27.1%, while UK sales increased by 15.3%, Europe sales by 13.2%, North America sales by 14% and Rest of the World sales by 16.5%. Some 37.2% of the company’s revenues were derived from the multibrand off-season business, including sales from Yoox.com and TheOutnet.com. The online flagship stores’ monobrand business accounted for 11.0% of the group’s consolidated net sales. The division’s strong sales performance was driven by a joint venture with Kering.

Key Performance Indicators

The average number of monthly unique visitors across the company’s sites rose by 7.9% year over year in FY16, to 28.8 million, and orders increased by 18.3%, to 8.4 million. The average order value excluding VAT was €334, down 5.1% from €352 in FY15, mainly reflecting unfavorable exchange rate movements. Active customers increased by 16% year over year, to 2.9 million at the end of FY16.

Outlook

YOOX Net-a-Porter provided FY17 revenue guidance of 17%–20% year-over-year growth. The company expects its EBITDA margin to improve slightly from FY16’s 8.3%. The company is also targeting FY17 capital expenditures of €160–€170 million. Analysts expect the company’s FY17 revenues to be up 17.7% year over year, to €2,201.9 million. Consensus expects FY17 EBIT of €100.3 million, implying an EBIT margin of 4.6%, and FY17 normalized EPS of €0.56.