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Introduction & Market Context
Italian fashion retailer OVS SPA (BIT:OVS) reported its Q1 2025 financial results on June 17, showing modest sales growth amid challenging market conditions. The company’s stock closed at €3.48, down 1.21% on the day of the announcement.
Despite macroeconomic uncertainties and unfavorable weather conditions, OVS managed to deliver a slight increase in sales while maintaining a stable financial position. The company also highlighted its strategic acquisition of underwear brand Goldenpoint, which is expected to significantly contribute to future growth.
Quarterly Performance Highlights
OVS reported Q1 2025 net sales of €354.4 million, representing a 0.6% increase compared to the same period in 2024. This growth was achieved despite what the company described as "a market still held back by macroeconomic uncertainties and increased rainfall."
The company’s adjusted EBITDA came in at €28.1 million, slightly down from €29.7 million in Q1 2024, representing a 5.3% decrease. OVS attributed this decline entirely to inflationary impacts on overhead costs. The EBITDA margin contracted to 7.9% from 8.4% in the prior-year period.
As shown in the following financial overview:
Breaking down performance by brand, the OVS brand showed positive momentum with net sales increasing by 2.0% to €261.2 million, while the Upim brand experienced a 3.0% decline to €83.7 million. This divergent performance highlights the varying market dynamics affecting different segments of the company’s portfolio.
The following chart illustrates the sales performance by brand:
Financial Position
As of April 30, 2025, OVS reported adjusted net debt of €261.1 million, slightly higher than the €254.2 million reported a year earlier. Despite this increase, the company’s leverage ratio remained stable at 1.34x EBITDA for the last twelve months, compared to 1.37x in the previous year.
The company’s debt position is detailed in the following table:
Strategic Initiatives: Goldenpoint Acquisition
A significant highlight of the presentation was OVS’s strategic move to acquire Goldenpoint, a leading Italian brand in underwear and beachwear with approximately 380 stores in prestigious locations. The company finalized an investment agreement on July 16, 2024, to acquire 100% ownership over a multi-year timeframe, beginning with a 3% stake and a convertible bond loan.
This acquisition represents a strategic step to strengthen OVS’s position in the underwear segment, a market currently dominated by one major player with the remaining portion highly fragmented.
The strategic rationale for the Goldenpoint acquisition is illustrated here:
OVS expects significant synergies from the acquisition, including a 10-15% reduction in purchase costs leading to an approximate 3-point increase in gross margin. Joint product development efforts, initially focused on underwear and nightwear, have already yielded excellent sales performance.
The company is also upgrading Goldenpoint’s network image with a new store format. The 10 refurbished stores are already demonstrating strong growth, and OVS has identified approximately 165 target markets for expansion, with an ideal coverage plan of 25 direct stores and 140 franchised locations.
The merchandising synergies are detailed in the following slide:
Financial Impact of Goldenpoint Acquisition
OVS expects Goldenpoint to contribute €50-60 million in net sales and positive EBITDA in FY 2025, representing 6-7 months of consolidation. Net debt at year-end is projected to be around €25-30 million.
Looking further ahead, OVS anticipates Goldenpoint to achieve annual net sales of €140-150 million within three years, with profitability projected to meet or exceed the OVS group’s average.
The financial projections for Goldenpoint are illustrated here:
Forward-Looking Statements
OVS provided an optimistic outlook for the remainder of 2025 and beyond. From May 1 to the presentation date, the company reported that sales had further accelerated, showing mid-single-digit growth compared to 2024. Year-to-date EBITDA is tracking ahead of 2024 levels.
Management expressed confidence in meeting growth expectations for the full year 2025. Looking ahead to FY2026, the company highlighted several favorable macroeconomic factors that could positively impact profitability, including:
1. Weakening of the US dollar
2. Lower costs for certain raw materials
3. Reduced bargaining power of Far East suppliers
These factors are expected to contribute to cost reductions in Spring/Summer collection purchases.
Store Network and Expansion
As of April 30, 2025, OVS operated a total of 2,223 stores across its various brands. This includes 862 OVS stores, 376 Upim stores, 81 Stefanel stores, and 888 Kids Stores. The company maintains a balanced approach between directly operated stores (DOS) and franchising, with 868 DOS and 1,339 franchised locations.
The comprehensive store network data is presented in this table:
Analyst Perspectives
While the presentation highlighted modest growth and strategic initiatives, there appears to be some discrepancy between the company’s reported figures and market expectations. According to a previous earnings article, analysts had anticipated higher revenue growth of around 6% for Q1 2025, compared to the 0.6% reported by OVS.
The stock’s performance on the day of the announcement (-1.21%) suggests investors may have been expecting stronger results or were concerned about the slight decline in EBITDA. However, the company’s strategic acquisition of Goldenpoint and positive outlook for the remainder of 2025 could provide potential catalysts for future growth.
With a current P/E ratio of 14.96x according to previous reports, OVS continues to trade at a relatively attractive valuation compared to its growth potential, particularly considering the expected contribution from the Goldenpoint acquisition in the coming years.
Full presentation:
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