安永-2017全球奢侈品行业报告（英文）-2017-82页-4mb

Summary of The Luxury and Cosmetics Financial Factbook 2017 Edition

Core Content

The Luxury and Cosmetics Financial Factbook 2017 Edition by EY provides an in-depth analysis of the luxury and cosmetics industries, highlighting key financial metrics, market trends, and M&A activity. It combines public data with insights from sector leaders to offer a comprehensive view of the current state and future outlook of these sectors.

Main Trends and Insights

1. Market Evolution and Consumer Behavior

• The luxury and cosmetics industries are undergoing rapid transformation due to changing consumer preferences, increased digital engagement, and evolving market dynamics.
• Consumers are adopting a "mix and match" approach, selecting products from different segments and price ranges, which has shifted brand strategies toward more flexible offerings.
• Millennials are leading this trend, favoring customization and digital-first experiences.
• High-end luxury growth has slowed, with a CAGR of +2.8% (2012–2016), while the premium and entry-to-luxury segments are showing higher potential, with an expected CAGR of +6% (2016–2020).
• Shoes are the fastest-growing category, with a projected CAGR of 11% in high-end luxury and 7% in premium/entry-to-luxury by 2020.
• Accessories (bags, shoes, small leather goods) continue to drive growth across all segments.

2. Market Segmentation and Regional Impact

• Mainland China is a key market, contributing over 30% of global luxury sales despite representing less than 10% of the market by country.
• Asia-Pacific accounts for 37% of the cosmetics market, with e-commerce becoming a dominant channel.
• The US and Western Europe remain the largest markets, with the US valued at €131 billion and Europe at €109 billion in 2016.
• Emerging markets are expected to contribute 56% of the growth in the personal luxury goods segment over the next five years.

3. Digital Transformation and E-Commerce

• E-commerce is growing rapidly, with online sales expected to increase by more than 20% annually.
• In the cosmetics sector, online sales now account for over 11% of consumption for select brands.
• Chinese consumers are increasingly using smartphones for shopping, further accelerating e-commerce adoption.
• Digital transformation is a central theme, with companies investing in multi-channel strategies, including e-commerce, to enhance customer engagement and service.

4. M&A Activities and Strategic Focus

• The M&A market for luxury and cosmetics remains active, with a focus on high-growth segments such as skin care, make-up, and fragrances.
• Middle-market companies and small accessible luxury brands are becoming more attractive to buyers.
• "Born digital" companies and those with digital innovation are gaining traction.
• Italy is a key player in the premium and entry-to-luxury segments, with a strong industrial base and traditional brand values.
• Switzerland is a major player in the watch component industry, with consolidation driven by supply chain security.

5. Financial Performance and Valuation

• Market capitalization of luxury companies increased by an average of 17% compared to 2016, with LVMH reaching nearly €100 billion.
• WACC (Weighted Average Cost of Capital) for luxury companies ranges from 7.0% (Chow Tai Fook) to 9.2% (Ralph Lauren), influenced by geographic exposure and debt levels.
• LTGR (Long-Term Growth Rate) for luxury companies is around 2.7%, consistent with previous years.
• Cosmetics companies show an average WACC of 8.7%, slightly higher than the luxury sector, with Natura as a notable outlier.
• The EBITDA margin for the luxury sector is expected to increase slightly in 2019, with Swatch and Coach showing significant improvements.
• Capex ratios are decreasing for luxury companies, with a shift toward digital investment and reduced traditional retail expansion.

Key Financial Parameters

Trading and Transaction Multiples

• Trading multiples for the luxury sector rebounded in 2017, reflecting increased investor confidence.
• Companies with higher growth expectations typically have higher trading multiples.
• The EY luxury and cosmetics index outperformed major indices like the S&P 500 and STOXX Europe 600, with a total return of 110% over eight years and 32% in the last 12 months.
• LVMH, Kering, L'Oréal, and Shiseido were among the top performers in terms of market capitalization and growth.

Key Challenges and Opportunities

• Managing new generations and structured finance in the equity of companies.
• Reaching full retail potential through optimized channel performance and sustainable growth.
• Creating merchandising capabilities by rationalizing collections and improving retail buying.
• Growing internationally with a sustainable go-to-market strategy.
• Embracing digital transformation to enhance customer engagement and service delivery.

Conclusion

The luxury and cosmetics sectors are at a pivotal stage of transformation, driven by digital innovation, shifting consumer preferences, and strategic M&A activity. While high-end luxury faces growth challenges, the premium and entry-to-luxury segments offer significant opportunities. Companies that adapt to these changes, particularly through digital engagement and international expansion, are well-positioned for future success.