- Downturn in revenues and earnings due to coronavirus crisis
- New Management Board team focuses on comprehensive transformation, first positive results already visible
Bregenz, July 23, 2020: Wolford AG, which is listed on Vienna Stock Exchange, has published today their annual financial statement for the fiscal year 2019/20 (May 2019 to April 2020).
Wolford AG generated revenues of € 118.5 million in 2019/20, registering a fell in revenue of 13.6% compared to the previous year figures of € 137.2 million. The strong lockdown measures and the restrictions imposed on travel due to the global pandemic had a decisive impact on all luxury sales particularly in the months of March and April 2020, when Wolford´s revenue fell by around 60%.
The new Management Board, which took up their roles in the fall of 2019, has promptly reacted by implementing a crisis response to include short-time working plans, as well as, since the end of March 2020, the conversion of part of their facilities to accommodate Care Masks’ production, to meet the increased worldwide demand, a move that has certainly cushioned fall in other revenues.
The socio-economic developments have clearly left their mark on the company’s earnings. Operating earnings (EBIT) fell from € -9 million in the previous year to € -28.7 million. The loss after taxes amounted to € -27.42 million (2018/19: € -11.10 million).
However, due to the first-time application of the new IFRS 16 lease accounting standard, Wolford reports a decrease of their operating expenses by € 16.3 million to € 37.81 million.
The substantial loss reported for the past financial year is also reflected in the balance sheet, despite the successful sale of the company’s property that will be reflected in the financial statements of Wolford AG for the current 2020/21 financial year. This non-recurring income will be stated as an accounting gain of around € 49 million.
New Management Board enforces transformation
In the first weeks of their activity, the new Management Board, Silvia Azzali and Andrew Thorndike, who took up their roles in the fall of 2019, kicked off a compelling program to reshape the business, through the “Program for Immediate Top and Bottom Line Impact” (“PITBOLI”) that includes the international store portfolio rightsizing, reducing rental payments, optimizing purchasing and procurement, and consistently enhancing efficiency in production and logistics. One key supplementary measure is the 50% reduction of the Time to Market. Wolford aims to bring already its next spring/summer collection to the consumer in a significant shortened time frame.
Wolford made substantial investments in technology and staff for its online business, extended its distribution channels with additional sales partners, and restructured its design, marketing, and sales teams. Furthermore, the product portfolio has been streamlined, with key foundations being laid to extend the core Wolford brand.
“Despite the severity of its impact, the coronavirus pandemic was and still is not an excuse for us”, underlines Andrew Thorndike, COO of Wolford. “We stress tested the PITBOLI program, revisited and adjusted all initiatives in terms of their effectiveness and timing, and will now consistently push forward implementing them.”
The increased digitalization during the mandatory lockdown has provided Wolford with new opportunities to further enhance its efficiency. By the end of April 2020 the company´s online sales exceeded a like for like growth of 41%, the June revenues were even at 54 % compared to last year and representing now more than 30% of the total revenue.
The Management strongly believes that the structural transformation the fashion industry has witnessed during the last months will further and drastically intensify in the near future.
“I strongly believe that there is a silver lining in all difficult situations. This pandemic era has given us the opportunity to review and streamline our Brand Architecture not only to help our consumers access and relate to the brand but to better guide the development of new products in the near future and expand our business into new segments” Silvia Azzali, Wolford CCO explained. “We will boost our digital presence and international expansion, focusing on the Brand’s DNA and values, including a strong push to our commitment to sustainability”.
Outlook
The effects of the crisis were still clearly visible in May 2020, with a reduction in revenues of around 50%. This was due mainly to the fact that the reopening dates for individual boutiques varied widely from country to country. The boutiques in Austria, Germany, and Scandinavia were able to gradually reopen in the weeks from mid-April already, while those in France, Italy, Spain, and North America only reopened from the end of May onwards, and in some cases only from the end of June.
Wolford plans to return to profitability on an operating level in 2021.