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1、DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should b
2、e aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. 8 September 2017 Global Equity Research Luxury Goods Global Luxury Goods CONNECTIONS SERIES The C
3、redit Suisse Connections Series leverages our exceptional breadth of macro and micro research to deliver incisive cross-sector and cross-border thematic insights for our clients. Research Analysts Guillaume Gauvill, CFA 44 207 888 0321 guillaume.gauvillecredit- Christian Buss 212 325 9667 christian.
4、busscredit- Sara Shuler 212 325 7643 sara.shulercredit- Pallavi Bakshi 212 538 8434 pallavi.bakshicredit- Looking for the next brand turnaround Assessing turnaround potential at six US/European luxury goods companies: With the success of Coach, Gucci and Calvin Klein, investors are looking for the n
5、ext turnaround story in the soft-luxury universe. We believe companies that have seen declining sales, margin pressure and falling CFROI largely as a result of brand fatigue and lack of cost discipline could qualify. In this report, we identify Burberry and Ralph Lauren as our top premium/luxury tur
6、naround picks, while we remain positive on Tods Group and cautious on Ferragamo, Hugo Boss, and Michael Kors. We look at seven factors: (1) the health of the underlying market, (2) brand value/equity currently discounted in the stock price, (3) the existing price/value proposition, (4) changes to ma
7、nagement and creative teams, (5) the progress made so far regarding cleaning up distribution, (6) cost cutting potential, and (7) potential margin upside. We upgrade Burberry to Outperform (new TP 2,000p from 1,650p): We note Burberry has undergone the biggest management reshuffle since its 2002 IPO
8、 and we believe the brand is well placed to capitalise on the need for newness in luxury thanks to its apparel exposure. Margins are close to historical lows and the cost cutting plan in place should alleviate concerns about further earnings downgrades. With sell-side positioning the most negative i
9、t has been since 2009, we think this creates a buying opportunity. We upgrade Ralph Lauren to Outperform (new TP $111 from $91): We believe the company is on track to return to meaningful growth and margin expansion from FY19. This follows significant changes to management, visible efforts to reinvi
10、gorate the brand/products, cleaning up distribution and rightsizing of the cost structure. We remain Neutral on Hugo Boss, Ferragamo and Michael Kors: We believe Hugo Boss (new TP 65) still faces a challenging suit market and we think its current price/value proposition may not yet be adequate. We l
11、ike Ferragamo in the long term but the transition phase is likely to hurt margins and trigger further earnings downgrades. We remain concerned about Michael Kors underlying brand health which is necessitating store and wholesale distribution rationalisation and a re-focus on pricing discipline. More
12、over, we find cost savings targets relatively underwhelming. Figure 1: Brand turnaround scorecard for the six selected companies BurberryTods GroupFerragamoHugo BossRalph LaurenMichael Kors Underlying market+-+ Brand equity+=+ Positioning or price/value proposition+=+ Management / creative director
13、changes+- Progress on distribution clean-up+=+- Cost cutting potential+=+- Margin upside potential+-=+- Average score+=+= Source: Credit Suisse research. Notes: + highly supportive, + supportive, + mildly supportive, = neutral and - not supportive 8 September 2017 Global Luxury Goods2 Key charts Fig
14、ure 2: Brand fatigue and little cost discipline have weighed on EPS forecasts for all six brands Figure 3: This has resulted in share prices lagging their peer groups Consensus EPS forecasts (June 2015=100) Share price relative to European luxury or US softlines (2015=100) 40 50 60 70 80 90 100 110
15、120 Jul-15Sep-15 Nov-15Jan-16Mar-16 May-16Jul-16Sep-16 Nov-16Jan-17 Mar-17 May-17Jul-17Sep-17 Tods (FY17e)Hugo Boss (FY17e)Burberry (FY18e) Ferragamo (FY17e)Ralph Lauren (FY18e)Michael Kors (FY18e) 40 50 60 70 80 90 100 110 120 130 140 Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-
16、17 TodsHugo BossBurberryFerragamoRalph LaurenMichael Kors Source: Thomson Reuters, Credit Suisse researchSource: Company data, Credit Suisse research Figure 4: Burberry is well placed to capitalise on the need for newness in luxury Figure 5: We expect Burberrys underlying margins in FY18 to be close to historical lows Estimated revenue breakdown for Burberry (% of total, in FY17) Retail/wholesale operating margins for Burberry Trenc
