Earnings call transcript: Lanvin Group’s Q4 2024 revenue drops amid industry challenges

Lanvin Group Holdings Ltd (LANV) reported a challenging fourth quarter of 2024, with a 23% decline in total revenue compared to the previous year. Despite these results, the company’s stock showed resilience, with a premarket increase of 4.23%, reflecting cautious optimism among investors. According to InvestingPro data, the company’s trailing twelve-month revenue decline stands at 12.07%, with a notable gross profit margin of 58.51%. The luxury fashion sector continues to face macroeconomic pressures, affecting Lanvin’s performance across its brands.

Key Takeaways

• Lanvin Group’s total revenue fell by 23% in 2024 compared to 2023.
• The stock rose 4.23% in premarket trading, indicating positive investor sentiment.
• New leadership appointments aim to drive product innovation and growth.
• Significant revenue declines were noted in Greater China and North America.

Company Performance

Lanvin Group’s overall performance in Q4 2024 was marked by a notable decrease in revenue, driven by a challenging macroeconomic environment that has impacted the luxury fashion industry. The company experienced revenue declines across all its brands, with Lanvin itself seeing a 26% drop. This downturn reflects broader industry trends, as luxury brands navigate economic uncertainties and shifting consumer behaviors.

Financial Highlights

• Total (EPA:TTEF) Revenue: €328 million in 2024, a 23% decrease from 2023.
• Lanvin brand revenue: €83 million, down 26% from the previous year.
• Revenue declines in other brands: Warfar (-31%), Sergio Rossi (-30%), St. John (-12%), Caruso (-7%).

Market Reaction

Despite the revenue decline, Lanvin Group’s stock showed a positive movement in premarket trading, rising by 4.23% to $1.97. This increase suggests that investors are optimistic about the company’s strategic initiatives and leadership changes. InvestingPro analysis indicates the stock is currently undervalued, though investors should note its high price volatility and tendency to move opposite to market trends. The stock’s performance remains within its 52-week range, with a low of $0.912 and a high of $3.78, indicating potential for recovery as the company implements its growth strategies. For deeper insights into Lanvin’s valuation and 12+ additional ProTips, consider exploring InvestingPro’s comprehensive research report.

Outlook & Guidance

Looking ahead, Lanvin Group anticipates a return to sales growth in 2025, though InvestingPro data reveals significant challenges, including a weak financial health score and concerns about debt management. The company is focusing on dynamic leadership, strategic partnerships, and product innovation to navigate the current economic landscape. With a current ratio of 0.53 and short-term obligations exceeding liquid assets, the upcoming product deliveries in the second half of 2025 and the establishment of a second European headquarters are crucial strategic initiatives to enhance operational efficiency and market presence.

Executive Commentary

David Chan, CFO, emphasized the company’s commitment to its long-term vision despite the challenging macroeconomic environment. Executive President Andy Liu expressed excitement about future opportunities, highlighting the company’s focus on innovation and growth. Chan also noted, "We believe that even in tough times, there’s always room for innovation and growth."

Risks and Challenges

• Macroeconomic pressures continue to impact consumer spending in the luxury sector.
• Geographic revenue declines, particularly a 40% drop in Greater China and a 19% decline in North America, pose significant challenges.
• The softness in the luxury fashion market requires agile leadership and strategic adjustments.

Lanvin Group remains focused on overcoming these challenges by leveraging its new leadership and strategic initiatives to drive future growth and maintain its competitive position in the luxury fashion industry.

Full transcript - Lanvin Group Holdings Ltd (LANV) Q4 2024:

Conference Moderator: Thank you for joining us and welcome to the Livan Group Fiscal Year twenty twenty four Revenues Results Conference Call. All participants will be in a listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. Now please take a moment to review the disclaimers.

During this presentation, the company will be making certain forward looking statements, including, but not limited to, future performance and industry outlook. Forward looking statements are inherently subject to risks, uncertainties and other factors, and they are not guarantees of performance. For today’s presentation, I would like to introduce David Chan, Executive President and CFO and Andy Liu, Executive President. I will now turn it over to David to start the presentation.

David Chan, Executive President and CFO, Livan Group: Thank you, and welcome to everyone joining us today. I’m David Chan, Executive President and CFO of Lan Wang Group. As anticipated, 2024 was a challenging year for the luxury fashion industry, marked by macroeconomic headwinds and a softer market environment. Our preliminary revenue for 2024 was €328,000,000 a decrease of 23% compared to 2023. While these results reflected broader industry trends and driven by a challenging macro backdrop that weighted on consumer segments, particularly in Greater China and wholesale channel.

Lamont Group has laid the foundation for gradual return to growth. We remain optimistic about our future prospects. We have taken proactive measures to consolidate our store network, optimize our retail footprint and enhance operational efficiency. We’ve also implemented strategies to reduce back office expenses and improve working capital management. The appointment of Andy Liu as Executive President is expected to drive strategic implementation and being transformative initiatives across our brands.

I will now hand over to Andy who will provide insight into our 2025 outlook.

Andy Liu, Executive President, Livan Group: Thank you, David. I’m Andy Liu. I would like to take a moment to say I’m honored to step into this new role as Executive President of the Lanbong Group. It’s a pivotal time for us, and I’m excited about the opportunities going forward. As we look ahead to 2025, our focus remains on driving growth and enhancing operational efficiency across our brands.

Here are some key initiatives we will be prioritizing. Number one, we will cultivate a dynamic and experienced leadership team that is agile and adaptable to change. Two,

Conference Moderator: we

Andy Liu, Executive President, Livan Group: are establishing a second headquarters in Europe to streamline operations and enhance decision making agility. Three, we will seek new revenue growth points in regions, product galleries and innovative business models through strategic partnerships and collaborative ecosystems. Fourth, we anticipate sales growth following the product launch of the new Artistic Director at Lanvin and Creative Director at Sergio Rossi. We are confident that these initiatives will position Lanvin Group for sustained growth and profitability in 2025 and beyond. It’s a new chapter and I can’t wait to see what we can achieve together.

With that, I’d like to turn it back to David to go through some of the brand level results in 2024.

David Chan, Executive President and CFO, Livan Group: Thank you, Andy. I’ll now provide everyone with more details on revenue results for each brand. Lanvin, our flagship brand, saw revenue decline of 26% from €112,000,000 in 2023 to €83,000,000 in 2024. This was driven by global slowdown in luxury demand and changing consumer preferences. Wholesale revenue fell by 32 due to a weak market for retailers and specialty stores.

D2C revenue decreased by 21% in line with the overall trend in the luxury sector. Geographically, Greater China saw a 40% decline and North America saw a 19% decline. The EMEA D2C market remained more resilient despite wholesale challenges. Lamont began rebalancing its distribution channels in 2024, targeting less productive stores and investing its first collection under the new artistic director, Peter Coffin. The highly anticipated developed fashion show by Peter in January 2025 received huge press release and unanimous positive comments on show and collection with product deliveries expected in second half of twenty twenty five.

Moving on to Warfar, Warfar’s revenue declined by 31% from million in 2023 to million in 2024. The EMEA region was most affected with a 36 decline, followed by Greater China and North America. The wholesale channel saw the greatest impact with a 46% decline, primarily due to the integration problem with a new logistic partner. In 2025, Morpho will celebrate seventy fifth anniversary with brand push in the second half of the year, focusing on optimizing product assortment and focus on hero products to enhance cash efficiency. From a channel standpoint, the company will continue streamlining its network retail network while placing strong emphasis on expanding both the wholesale and e commerce channel.

Now, I’d like to discuss Cedrovsky. Sertral Rossi’s revenue declined by 30% from million in 2023 to 42,000,000 in 2024. The EMEA market included China both declined by 35%. However, Japan remained stable at 8% decrease, while outlet revenue increased by 15%. In July 2024, Sergey Rossi appointed Paul Andrew as Creative Director.

In ’twenty five, the brand will focus on enhancing the wholesale business with Paul Andrew’s new collection and seeking local partners to explore high growth regions. Moving on to St. John. St. John’s revenue declined by 12% from EUR 90,000,000 in 2023 to EUR 79,000,000 in 2024.

North America outperformed other regions with domestic wholesale growing by 3% due to a strategic partnership with Nordstrom (NYSE:JWN). Retail revenue decreased by 9% and e commerce decreased by 15%. Both platform migration and distribution relocation negatively impact top line in the fourth quarter, but are expected to drive growth in GL25. In GL25, St. John repositioned its retail portfolio in key markets, opening flagship boutique in New York and Beverly Hills.

It also completed an impactful digital upgrade in Q4 to better highlight products and elevate client experience on-site. These upgrades are expected to provide a cohesive cross channel shopping journey. In 2025, the brand will continue to focus on North America, leveraging its Southern California heritage through powerful storytelling and strong product positioning. Finally, I’d like to discuss Caruso’s results. Caruso’s revenue decreased slightly by 7% from EUR 40,000,000 in Jan twenty three to EUR 36,000,000 in Jan twenty four.

The B2B Maisons orders decreased due to difficult luxury market that impacted some of the company’s top clients. Lower buy of these clients were partially offset by new acquired top customers. The Kuruso brand business grew double digits, gaining market share attributed to the appeal of its playful elegant collections and the its undisputed quality level offer at a customer respectful luxury price. Also, the brand’s made to measure is expanded driven by its outstanding service level. The Caruso brand is poised to continue to grow supported by a revitalized and strengthened distribution team and several appealing market initiatives being implemented.

In 2025, Caruso expects to grow two new designs and business relationships, supported by revitalized distribution team and marketing initiatives. To conclude, I want to take a moment to reflect on where we are and where we are heading. Despite the challenges in macroeconomic environment, Bauman Group remains steadfast its commitment to our long term vision. We believe that even in tough times, there’s always room for innovation and growth, especially in the luxury fashion industry where we hold much of a unique and nimble position. We’re taking decisive steps to enhance our management capability in the past months.

Under the leadership of our new exec president, Andy, we’re building a dynamic and forward thinking leadership team. This is crucial as we establish our second headquarter in Europe, which will not only strengthen our local presence, but also optimize our decision making efficiency. We’ve also been proactive in consolidating our store network, focusing on our core business units and optimizing our retail footprint. This strategic move ensures that we remain agile and efficient in a rapidly changing market. On the creative front, we are excited about a new energy and vision brought by our newly appointed Artistic and Creative Directors, Alain Van and Sergio Rossi.

Peter’s debug show in January 2025 was a resounding success, and we are confident that this is just the beginning of a new chapter of growth of our brands. We remain committed to our long term investment and successful in the luxury fashion industry and we’re excited about the journey ahead. Thank you.

Conference Moderator: Thank you, David and Andy. We will now begin the Q and A session. There are no questions at this time, which concludes our question and answer session and concludes our conference call today. Thank you for attending today’s presentation. You may now disconnect.

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