Lanvin Group Holdings (NYSE:LANV) Q2 2026 Earnings Call

0:00 Thank you for joining us, and welcome to the Lanvin Group's twenty twenty six First Half Financial Results Conference Call. All participants will be in a listen only mode. 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 guarantee of performance.

0:48 For today's presentation, I would like to introduce Ross Lowe, CFO of Lanvin Group. With that, I would like to turn it over to Ross to start the presentation. Thanks very much, and welcome, everyone, and good morning. I'm Ross, and I'm very pleased to join Lanvin Group as a Chief Financial Officer in June this year. I look forward to working with Andy and also our brand leadership team to further strengthen the group's financial performance and to support the next phase of our transformation. The first half of twenty twenty six was an important period for the group as we continue to execute our transformation while operating in a still very challenging luxury market environment.

1:36 We have made a meaningful progress on the quality and the efficiency of the business. Gross margin improved to 59%, while the contribution profit and adjusted EBITDA margins have both improved by seven point seven and ten point seven percentage points, respectively. At the group level, revenue was $101,000,000 down 13% on a year over year basis. This reflects the broader transformation and the rationalization of the business underway across all of our brands. I wanted to highlight that our e commerce business returned to growth in the first half of twenty twenty six, and we continue to make progress in reshaping the retail footprint with 151 directly operated stores by the end of June twenty twenty six.

2:29 The most important takeaway from the first half I wanted to share with you is that the transformation is translating into a leaner and more efficient operating platform. We are now focused on taking that foundation and converting that to renew the growth. And now please allow me to briefly highlight some of the developments across the four brands that we have. At Lanvin, the house continued to build creative momentum with its FW26 Paris runway received a strong response from the market. The brand also marked an important milestone with the one hundredth anniversary of Lanvin Men's Square and further strengthened its leadership during the time.

3:18 At the Woolfur, we saw encouraging stabilization in the underlying business. Gross margin recovered to approximately 60%, while the brand continued to strengthen its supply chain capabilities and advance its ESG initiatives. We also entered a new leadership chapter with Marco Pozzo as the CFO and also Chairman. As Sergio Rossi, the focus has been on repositioning the business around a more focused and asset line model. The brand has streamlined its supplier base, strengthened the strategic partnerships and also continue to rationalize its retail network. Importantly, wholesale excluding third party production has grown 21% year over year, giving us a stronger base to build on that in the second half.

4:12 And at the Saint John, we continue to see resilience in the underlying business. E commerce grew 31% in its reporting currency and the gross margin remained very strong at approximately 70%. And as the brand is developing new channel opportunities while preparing for its next chapter of creative developments in the second half. Across our portfolio, we are seeing encouraging signs that the work on the brands, products and operating model is beginning to create a stronger foundation for future growth. Let's now turn to our priorities for the second half of the year. Our priority is to continue executing the reset and the transformation agenda.

4:58 This includes the ongoing optimization of our retail footprint and also further improvements in how we operate across the group. Secondly, we want to move beyond optimization and focus increasingly on growth opportunities across different markets, channels and product categories. Thirdly, we will make greater use of partnerships and the collaborations to extend the reach of our brands, access new customers and develop additional revenue opportunities, including through asset light models. And finally, we'll also remain disciplined on costs, working capital and cash, while selectively investing behind the areas that can generate the strongest returns.

5:46 In addition, we will continue to optimize the group's brand portfolio, ensuring that our resources remain focused on the brands and opportunities with the strongest long term potential. We believe the combination of a leaner operating model, stronger brand leadership Ladies and gentlemen, it looks like we've lost connection with our speaker. Please hold while we reconnect. Ladies and gentlemen, thank you for your patience.

8:16 We've reconnected with our speaker. Apologies for dropping off for technical issues. I can resume. We believe the combination of the leaner operating model and the stronger brand leadership and a more focused approach to growth will give us a solid platform for the next phase. And then now please allow me to turn everybody's attention to the group's financial performance in the first half of twenty

8:46 twenty six now. As mentioned previously, the revenue for first half was €101,000,000 representing a 13% year over year decline. However, the more important feature of the first half was the substantial improvement in profitability. The gross margin of the group has increased from 57.7% to 59% and the contribution profit margin improved from negative 16.6% to negative 8.9%, while the adjusted EBITDA margin improved from negative 45% to negative 34%. In absolute terms, the contribution margin improved the contribution profit has improved by approximately EUR10 million and the adjusted EBITDA improved by approximately EUR17 million.

9:38 This improvement reflects the benefits of our efficiency programs, lower selling expenses and also a more disciplined base cost structure. We have seen tangible evidence that the reset is improving the economics of the business even before a broader revenue recovery is reflected in the results. Page eight put our first half revenue performance into a longer term perspective. The decline in revenue this year reflects both the market environment and the deliberate actions we have taken to reshape the portfolio and distribution footprint. In particular, we have continued to rationalize underperforming retail locations, while encouraging like for like performance has partially offset the impact of those closures.

10:31 While rebuilding the top line remains an area of focus for us, we are also entering the second half with a more focused network, a lower cost base and also improving digital momentum. Page nine highlights the improvement in our operating cost structure. We have continued to reduce the cost base across the group, while being very selective about where we maintain or increase the investment. Marketing and selling expenses have become more efficient, while G and A has also declined significantly from prior periods. These actions have translated directly into the significant improvement in profitability that we delivered in H1.

11:17 And to the next page, Page 10 shows the evolution of the G and A costs across the portfolio. Since the first half of twenty twenty three, we have continued to reduce brand level G and A by approximately 30% at the Lanvin, 50% at Welfare and 45% at Sergio Rossi and 43% at the Zhenjiang. These reductions reflect a combination of organizational simplification, tighter spending discipline and a more focused operating model. At the same time, we continued to selectively invest in the areas that are critical to long term brand developments, including creativity, product and the customer engagements. The balance we are aiming for is very clear, a leaner cost base without compromising the capabilities that are required to grow our brands.

12:13 Page 11 continue to cover our retail footprint. As mentioned, during the first half, we continue to rationalize the network, reducing directly operated stores from 174 at the end of twenty twenty five to 151 at the end of June twenty twenty six. This remains an ongoing process. We are continuing to rationalize the underperforming locations in the stores, while selectively pursuing strategic openings where we see appropriate. The objective is to create a more focused and productive retail platform with a stronger economics and a better customer experience. As this work continues, we are also increasingly focused on driving productivity within the existing network and through traffic generation, clienteling, merchandising and the services.

13:11 I will now move to the individual brand results, starting with Lanvin first. Lavon generated revenue of EUR 22,900,000 in the first half, down by 17.9, primarily Ladies and gentlemen, we have disconnected with our speaker. Please stay on the line while we reconnect. Ladies and gentlemen, thank you for your patience.

14:36 Ross, you may begin. Yes. As I just too about to continue, LANVON generated revenue of EUR22.9 billion in the first half. And more importantly, the underlying performance showed several encouraging trends. On a like for like basis, sales across boutique stores remained positive despite store closures, while the wholesale revenue increased by 16% supported by earlier fallwinter deliveries. The gross margin on LANVON was particular highlight expanding by almost three ninety basis points to 58.2%. This reflects a stronger sell through and the better product lifecycle management.

15:23 We also saw a meaningful improvement in contribution margin with the loss reduced from 12,300,000 to €6,200,000 And in the second half, the focus is on converting this improved foundation into further growth. And now I will turn to Wolford. Wolford's revenue was €31,000,000 in the first half, down 6% year over year, but the business has shown improving momentum as its operating platform continues to stabilize. The DTC business of Wolford declined only by 2%, largely reflecting the ongoing store network optimization. Importantly, like for like retail remained positive and the e commerce business grew by 22%.

16:13 And the wholesale of Wolford was down by 12%, primarily because of timing related comparables from the prior year of first half. The partner sell through however remained very encouraging for us. The strongest financial development was a recovery in gross margin, which increased from 56% to 60%. And in the second half, Wulfur will build on this more stable platform by strengthening wholesale, expanding e commerce and the marketplace initiatives, and also continue to improve productivity and customer engagements. And also let's now turn to St. John. St. John's revenue was €35,500,000 down by 10.5%, reflecting its retail footprint rationalization as well as unfavorable currency dynamics.

17:09 On a U. S. Dollar basis, the decline was more limited at only approximately 5%. The underlying business continues to show resilience. Most notably, the e commerce business of Zhenjiang grew 31% in its reporting currency, supported by more effective digital acquisition, improved marketing ROI and also growth in the new customer base. The brand is also developing new growth channels, including concession based models, which are also helping to establish a more diversified growth pipeline. The gross margin of Zhenjiang increased to 69% and the contribution margin improved to 12.3. Looking ahead, Zhenjiang will build on its new creative leadership with two capsule collections planned for the second half and continued development of proprietary yarns that will reinforce the brand's craftsmanship and also product differentiation.

18:12 And finally on Sergio Rossi. Sergio Rossi's revenue was €10,900,000 down 28.6% on a year over year basis as the brands continue to implement its planned channel strategy and the transition towards a more focused SLI model. Within the core business, there are positive indicators. The wholesale revenue excluding third party production has increased to 21 percent, demonstrating renewed appetite from partners and creating a stronger platform for the second half. Third party production revenue decreased by $1,900,000 reflecting the planned phase out of this activity as we want the Rossi to transition towards a more focused and the SLI model.

19:00 The gross margin was temporarily pressured by a shift in its channel mix, heavier clearance activity and also the ongoing supply chain transition. We nevertheless maintained a tight control over selling expense and other expenses, which will help maintain the impact on its contribution margin. For the second half, the priority is to capitalize on the stronger reception of its SS27 collection, improve its wholesale and also sell through, rebuild the margin through supplier negotiation, procurement discipline and also supply chain optimization. And before we open to Q and A, let me summarize the first half results.

19:49 The first half of twenty twenty six for Lanvin Group marked a very meaningful progress of the Group's transformation. While the revenue remained under pressure, we materially improved the bottom line while continuing to build a leaner and a more efficient operating platform. We also continue to optimize our retail footprint while seeing encouraging developments across e commerce, like for like retail performance and wholesale at several of our brands. Looking ahead, our focus is very clear, continue executing the transformation to create new avenues for revenue growth, leverage partnerships and collaborations and maintain discipline in cost, working capital and cash flow management.

20:42 We believe the progress achieved in the first half provides a stronger foundation from which to build a sustainable growth across the portfolio. So thank you for everybody for joining us and also for your continued support to LANVON Group. We will now be open for the line for questions. Thank you. We will now begin the question and answer session. There appear to be no questions at this time.

22:00 And this concludes our question and answer session, which also concludes the conference call. Thank you for attending today's presentation. You may now disconnect.