Wolford announces results for the first quarter of 2013/14

Revenues decline 2.4% to € 32.28 million

  • Earnings below prior year
  • Continued solid balance sheet structure
  • Intensification of wholesale and optimization of retail business
  • Goal for full year: revenue growth and positive operating results

 

Vienna/Bregenz, September 13, 2013. Wolford AG, which is listed on the Vienna Stock Exchange, can look back on a challenging first quarter in the 2013/14 financial year, despite a slight improvement in the economic environment. The period from May to July 2013 closed with a 2.4% decline in revenues to € 32.28 million and EBITDA of € -3.19 million, compared with € -0.98 million in the previous year. EBIT totaled € -5.18 million (Q1 2012/2013: € -3.01 million), which generally reflects expectations. After an adjustment for foreign exchange effects, the revenue decline amounted to only 1.1%. Revenue growth in the retail points of sale was satisfactory at plus 5%, while the online shops recorded a sound increase of 19%. The generally reserved mood among retailers during the reporting period was reflected in a 12% decline in revenues from the wholesale business and negative revenue and earnings development for the Group. However, the first quarter is the weakest period in Wolford’s financial year for seasonal reasons because comparatively lower revenues are contrasted by above-average costs.

Earnings below prior year

Revenue growth in the retail business, which equaled 3% including and 4% excluding foreign exchange effects on a like-for-like basis, was unable to offset the overall cost increase. These higher costs are attributable, among others, to increased rental and personnel expenses at existing locations and to start-up costs for new locations. Negative foreign exchange differences of approx. € 0.7 million were also recognized in the first quarter. The € 0.4 million rise in advertising expenses also played a role in the EBIT decline, but should be seen within the context of efforts to strengthen and improve the international positioning of the Wolford brand.

Continued solid balance sheet structure

The balance sheet structure of Wolford AG remained solid as of the quarterly closing date on July 31, 2013. The Wolford Group’s equity totaled € 73.72 million (July 31, 2012: € 81.02 million). The equity ratio equaled 50% (July 31, 2012: 53%) and gearing was 39% (July 31, 2012: 31%).

Performance of product lines differ

In the Lingerie segment, the continuing trend to body-shaping underwear was reflected in the positiv development of revenues. Revenues were also higher in the Accessories and Trading goods product groups, but slightly lower in the Ready-to-wear business. Revenues in the small, exclusive Swimwear product group declined as a result of seasonal factors. Legwear, the largest product group, reported a substantial revenue decline in comparison with the first quarter of the previous year, above all in the wholesale area.

 

Intensification of wholesale and optimization of retail business

Against the backdrop of business development during the past quarters, the management of the Wolford  Group has initiated a process that includes a detailed analysis of the company’s orientation and opportunities for optimization in both the strategic and operating areas. The focus on the wholesale business will be increased, also through the reallocation of personnel resources and the implementation of an incentive/contribution system. Another focal point is the optimization of the retail business, whereby a concept
is being developed to increase the frequency in Wolford’s own shops. The existing locations will also undergo a further profitability assessment. The continuation of marketing measures in selected regions is designed to strengthen Wolford’s position as a leading fashion brand in the segment of affordable luxury products.

Continuation of international expansion

The continued expansion of the international distribution network will also represent an integral part of the strategy. The geographical focal points include the Group’s core markets in Europe and North America as well as the further development of activities in the growth markets of Greater China and the Middle East where the opening of new locations is planned. Wolford also sees additional opportunities in the online business, where positive development shows that further revenue growth can be expected in this sales channel.

Goal for full year: revenue growth and positive operating results

Based on the measures initiated, we expect an improvement in wholesale revenues that should halt the current negative trend. The retail business should also generate further revenue growth. The Management Board Wolford AG therefore expects an increase in revenues as well as positive operating results for the 2013/14 financial year.

The report on the first quarter of 2013/14 is available under www.wolford.com/Investor Relations.

For additional information contact:
Holger Dahmen (Chief Executive Officer)
Thomas Melzer (Chief Financial Officer)
+43 (0) 5574 690-1268 (IR) / +43 (0) 5574 690-1477 (PR)
investor@wolford.com

About Wolford AG
Wolford AG headquartered in Bregenz on Lake Constance (Austria) operates 16 subsidiaries and markets its Legwear, Ready-to-wear, Lingerie, Swimwear, Accessories and Trading Goods product segments in about 70 countries via more than 260 monobrand stores (own and partner-operated), approximately 3,000 trading partners and online. The company, which has been publicly listed on the Vienna Stock Exchange since 1995, generated sales of EUR 156.47 million in the 2012/13 financial year (May 1, 2012 – April 30, 2013), and has
about 1,600 employees. Since its founding in the year 1950, Wolford has evolved from a local producer of hosiery to a global fashion brand in the segment of affordable luxury products.

Download pdf