• Slight reduction in loss despite lower revenues and higher investments
• New market image and market offensive in China
Bregenz, July 23, 2019. Wolford AG, which is listed on the Vienna Stock Exchange, today published its annual financial statements for the 2018/19 financial year (May 2018 to April 2019). Its revenues amounted to € 137.22 million and thus fell 8% short of the equivalent figure for the previous year (€ 149.07 million). In common with stationary fashion retailers worldwide, Wolford is suffering from the effects of far-reaching structural change and a slowdown in growth in West European fashion markets.
Thanks to the sustainable impact of its existing restructuring program, however, the company fully made up for the € 11.85 million reduction in its revenues. Despite lower revenues, operating earnings (EBIT) showed a slight improvement of € 0.24 million from € -9.22 million in the previous year to € -8.98 million. Earnings after taxes also improved slightly, in this case from € -11.53 million to € -11.10 million. The success of the restructuring program is reflected above all in the company’s personnel expenses, which fell to € 60.24 million, down by a substantial sum of € 14.97 million compared with the 2016/17 financial year. Following the measures taken in the past two financial years to cut jobs in the administration and production departments in Bregenz, the average number of employees (FTEs) fell by 197 compared with the 2016/17 financial year and now amounts to 1,347 (2018/19 financial year: -86 FTEs). Notwithstanding substantially higher investments in marketing in the past financial year, other operating expenses also fell, in this case by € 1.19 million to € 54.14 million.
Financial structure boosted by successful capital increase
The Wolford Group’s equity amounted to € 42.72 million at the balance sheet date on April 30, 2019, € 8.82 million higher than the equivalent figure in the annual financial statements for the previous year. This was due above all to the capital increase successfully executed in July 2018. The equity ratio rose to 36%, up from 30% one year earlier.
Course set for profitable growth
Wolford took the 2018/19 financial year above all as an opportunity to lay major foundations to stabilize its revenues. Since August 2018, the company has implemented a new window display concept across Europe and introduced a completely new visual imagery scheme targeting younger target groups in particular. The new store concept was presented in Amsterdam and Paris at the beginning of 2019 and is due to be gradually implemented at other locations in the near future, starting with three stores in Asia. Wolford is also creating new momentum with its collection. In September 2019, for example, the company will be launching “ATH_W”, its first sports-inspired “athleisure” collection, onto the market. This has already met with a positive reception from specialist audiences. Furthermore, the sales organization was optimized to enable sales activities to be managed by an extended sales team based in the fashion center Milan.
Not least, in the 2018/19 financial year Wolford presented a partner for its planned expansion in China. Studies show that, within just a few years, Chinese customers will account for almost half of global luxury goods consumption. Not only that, the market for luxury goods in Asia is expected to grow substantially. Wolford intends to exploit these opportunities systematically. The experienced team at its new partner FFBM (Fosun Fashion Brand Management) should help Wolford to sustainably develop the Chinese market and actively draw on all distribution channels. In the medium term, the share of revenues Wolford generates in China should be comparable with that in its existing core markets of the US and Germany, which currently account for 20% and 15% of revenues respectively.
Having said that, the market offensive in China is expected to benefit revenues only gradually, and that not in the short term, not least since the company has to maintain a cautious approach in terms of its investments.
Against this backdrop, Wolford has initiated and already partly implemented further restructuring measures. The company therefore only expects to generate positive operating earnings once again in the 2020/21 financial year.