Sephora New Zealand posts fourth straight loss as parent LVMH keeps cash lifeline flowing
Sephora's financial performance continues to wane as it reports its 2024 financial result.
The New Zealand arm of beauty and makeup retailer Sephora has posted its fourth loss in a row and remains financially dependent on its parent company LVMH Moet Hennessy Louis Vuitton to continue operating.
Sephora New Zealand reported total revenue of $27.36 million in the 12 months to December 31, 2024, down 7.6% from $29.6m in 2023, accounts filed to the Companies Office today show.
The business’ gross profit also fell, down from $13.85m in 2023 to $13.1m in 2024.
Sephora New Zealand salaries and wage expenses decreased from $3.5m to $3m, suggesting it may have reduced its headcount.
The company’s management also performed an impairment assessment on all stores at the year-end, resulting in an impairment loss of $782,992.
A reversal of an impairment loss of $87,382 was also recognised during the financial year relating to its ship from store project and Queen St store.
Overall, Sephora New Zealand reported a net loss for the year of $3.4m.
The result is the fourth straight recorded loss for the company, dating back to 2021.
In 2021, the company’s earliest recorded result, it reported a net loss of $4.6m. However, at this stage, the business had already accumulated $10.5m in total losses.
In 2022, the business reported its largest single annual loss of $10.5m, with its accumulated losses reaching $21.1m.
In 2023, its loss was $3.9m, an improvement of 63% on the year prior.
Its accumulated losses have now reached $28.53m, with a deficiency in equity of $23.58m.
If a business has a deficiency in equity, it indicates insolvency and high financial risk.
To help support its continued trade, Sephora New Zealand has received repeated increases to the loan from its parent company, Louis Vuitton Moet Hennessy (LVMH).
LVMH Group Treasury has repeatedly funded the business through a cash pooling facility, bearing a current average interest rate of 0.51%.
In the company’s earliest reported result from 2021, Sephora’s related party borrowing from LVMH was $13.7m.
For every year since, Sephora New Zealand has increased its borrowing, with the current amount owed $26.1m.
“The ability of the company to continue as a going concern is dependent upon the continued financial support of its ultimate parent entity, LVMH Moet Hennessy Louis Vuitton S.E.,” it said in its annual report for 2023.
“The directors have received a letter of financial support from the ultimate parent entity, in which LVMH Moet Hennessy Louis Vuitton S.E undertakes to provide sufficient financial support, if required, in order for the company to continue operations and to meet its commitments for a period of at least 12 months from the date of signing these financial statements.”
Sephora has stores in Sylvia Park and Newmarket.
The company closed its Queen St store in August 2024.
The Herald has contacted Louis Vuitton for comment.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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