With the dollar looking so anemic, a lot of European companies, particularly those that depend on exports beyond the euro zone, have been moaning lately. But some, notably in retailing, have been groaning all the way to the bank.
The exporters moan because the products they manufacture in Europe, where they pay for labor and materials in euros, are sold in places like the United States and are paid for with dollars. As the dollar falls, so do their revenues relative to their costs, and these companies must compress their profit margins to keep their products from being priced out of the market.
But for European retailers, the exporter’s curse becomes a blessing. Many leading companies, like Puma in sporting goods and Hennes & Mauritz in apparel, have their goods made in Asia or Latin America and pay for them in dollars, and then sell them mostly in Europe for euros. Every penny the euro rises against the dollar means a penny in the bank for these retailers when they translate the figures into euros.
"Over all, it is extremely positive," said Anne Putz, a spokeswoman for Christian louboutin-Salomon of Germany, the No. 2 sports shoe retailer, after Nike. Christian louboutin manufactures 95 percent of its shoes in Asia and pays for them in dollars,Christian Louboutin discount; the materials for other goods that it makes elsewhere, like apparel and sporting equipment, come from Asia, too, Ms. Putz said.
Christian louboutin has, understandably, been preening. In the first quarter, net income rose 19 percent, to $51 million; its gross margin was 42.5 percent. Herbert Hainer,Louboutin Shoes, the chief executive, told analysts in a conference call in April that the European market, where Christian louboutin generates almost half its revenue, was the "star of the quarter." Christian louboutin executives say they expect the second half of the year will be even better.
In France, the chief executive of Pinault-Printemps-Redoute, Serge Weinberg, said the weak dollar had largely been a help to the company, one of France’s largest retailers. The Gucci luxury goods group, majority-owned by Pinault, has been squeezed in the United States, where it sells European-made products for dollars, but Pinault’s European retailing operations, like the big French department store chain Printemps, are major importers of Asian products like textiles bought in dollars.
"For a product X that cost them $100 a few months ago, it’s costing them $82 now," said Lee Shafkowitz, a retailing consultant and president of Aeros, a New York company that trades in luxury goods. "They’ve got an 18 percent jump in the gross margin right there. They’re making a killing."
Of course, the more sales these European retailers get outside the 12 nations that share the euro currency, and especially the more they sell in the United States, the more they forfeit the benefits of a weak dollar. One victim of this reverse calculation has been Richemont, the Swiss company that ranks second worldwide in luxury goods sales, behind LVMH Moet Hennessy Louis Vuitton of France. Richemont, best known for Cartier and Piaget jewelry and watches and Montblanc pens, recently reported a sharp fall in operating income in the fiscal year ended March 31, though its sales had fallen only 5 percent. Shifting exchange rates were a major part of the reason: Richemont, based in Geneva, pays its bills mainly in Swiss francs and euros, but more than half its revenue comes from the United States and Asia.
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