Wolford bouncing back, but dept stores changes in Europe, US, dent wholesale
Wolford took an upbeat stance on Friday as it reported its nine-month results to January, highlighting the impact new majority owner Fosun should have on the brand’s prospects after some turbulent periods.
But the main focus was how it had fared under its previous ownership and there was some good-ish news on this front as its losses are shrinking, even if the company isn’t exactly out of the woods yet.
In the nine months to January, revenues edged up 1% to €119.36 million. But on a currency-neutral basis, sales rose a better 1.79%. However, there was bad news over the crucial Christmas quarter as Q3, saw both the US dollar and British pound denting revenue, which fell 4.3% to €49.21 million.
Back with the nine-month period, the loss on an Ebit basis was €1.36 million, much better than the €4.14 million of a year earlier. And the net loss improved to €2.57 million from €5.08 million.
The best news was that the firm’s retail stores saw revenue rising 1.7% in the nine months. After a few bruising years that change was very welcome, and those sales rising 3.7% on a comparable basis were encouraging too. Meanwhile, the firm’s webstore raced ahead by over 20%.
However, the wholesale business declined 2.7% when adjusted for currency effects with department stores being the problem. Wolford said that changes in department stores mean that hosiery is being moved form prime positions near the entrance to higher floors that get less visitor traffic. This is a major challenge for the firm and one that isn’t likely to be easily solved. It means a greater focus on its own store makes sense, but the nature of its business also means it can’t really leave department stores behind altogether.
Regionally, the company saw a mixed bag of results. Certain markets in both West and East Europe did well on the back of the firm’s own stores, but others proved weaker. US revenue dipped 1.7% while the UK was down 8.7%, France fell 3%, Germany 2.2% and Switzerland 6.7%. In those countries, the firm’s stores couldn’t make up for the shakier wholesale business.
And there were mixed results for company’s different products with lingerie and RTW up 4.5% and 1.2%, but legwear fell 3.9%, accessories 18.3% (due to a streamlined product portfolio) while ‘trading goods’ fell 12.1%.
The company said it managed to reduce its inventories in the first three quarters of the year after the prior year had been marked by “sales planning mistakes”. And costs (including staff) fell too. But one-off legal and consulting expenses added an extra €1.57 million to the firm’s cost base.
But that’s the past, what of the future? While the firm was optimistic on Friday, it actually said that it expects revenue to be lower than previously predicted for the rest of the year due to currency exchange issues. And it will stay lossmaking for this year. But in the 2018/19 financial year, it’s predicting a return to positive operating earnings, even if net income won’t return to the black straight away.
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