Bregenz, August 27, 2021: The first 6 months of the fiscal year 2021, from January to June, developed similarly to the last months of 2020. While trading in the US and China continued solid growth, ongoing and new Corona measures, particularly lockdowns, led to significant business losses in Europe
Strong 1st half-year with double-digit sales and earnings growth
Despite 6-7 months of continuous lockdowns in numerous European countries, sales and earnings increased year-over-year. Store closures during the first COVID 19 wave lasted only 2-3 months, predominantly between March and May 2020, so the extended and varied lockdowns of 2021 have been a significant challenge.
With a turnover of € 41.9 million for the reporting period January to June 2021, the previous year (January to June 2020) was exceeded by € 3.7 million (approx. 10 %). Likewise, with a result of €-13.3 million the previous year’s results were surpassed by approx. +31 %. This does not include the impact of the real estate sale. As reported, the revenues of € 72 million from the sale of the property at Wolfordstrasse 1-3 in Bregenz were used at the beginning of May 2020 to completely reduce the company’s financial debt.
In addition to the significant reduction in operating costs (personnel expenses and other operating expenses) of +11 %, a +4.5 percentage point increase in the gross profit margin to 81.4 % (gross profit margin) compared to the same period of the previous year was the main reason for the jump in earnings.
As part of the the “PITBOLI” (Program for Immediate Top and Bottom Line Impact) restructuring program, all measures set up since the beginning of 2020, as well as additional measures, were sufficiently implemented.
Sales growth in nearly all channels and geographies; Online, U.S. and China business grow double-digits; new brand architecture successfully implemented
Compared to the previous year, sales increased by a total of 10%: 65 % growth in the China business (in CNY), and 32 % growth in the US business (in USD) were the primary geographical growth drivers. In EMEA sales were approximately maintained. Sales in the online business grew at a double-digit rate of 18 % compared to the previous year. The share of sales generated by the Group’s own online business and the associated online business of its wholesale partners (e-tailors) increased further to a total of around 34 %, compared to 21 % in the previous year.
The new brand architecture introduced last year is well established thanks to a strong plan of collaborations within the “W Lab” and the consolidation of “The W”, the collection with a more contemporary and urban attitude.
With the first international cooperation of the year, Amina Muaddi x Wolford, a new and fashion-conscious consumer group was reached internationally, driven by a predominantly digital marketing approach and stationary presence in selected fashion stores. Key markets were successfully expanded even further through local collaborations. The first cooperation with Neiwai, a Chinese brand known for its simple and sustainable lingerie, will be presented in China in September.
Restructuring with strong bottom line effect; costs further reduced significantly; efficiency increase in core areas
Having already reported a reduction in operating costs (personnel costs and other operating expenses and depreciation and amortization) of approximately -8 % year-on-year for the short fiscal year 2020 (May to December), “PITBOLI” delivered a significant reduction in operating costs of -11 % compared to the previous year. Predominantly, the relevant cost blocks “personnel, rent, purchasing, production and logistics” were consistently addressed. Relevant efficiency increases in the administrative areas like finance, customer service, payroll and HR were also achieved.
Outlook: Long-term strategy secures sustainable value creation
With the strong half-year results from 2021 and a solid strategy for the second half of the year, the Executive Board confirms the break-even for the fiscal year 2021 from today’s perspective, provided that the assumptions regarding the development of the Corona pandemic hold. Thus, Wolford continues to be on a strong growth track with sales approx. € +1.7 million (+23%) above July 2020.
Sustainable and profitable growth is to be secured by the implementation of the long- term strategy “North Star/Master Plan for Wolford”. An overall strategy has been defined along the core pillars of “Brand”, “Collection”, “Geographies” and “Channels” and has already been tackled with 12 strategic projects in the consistent sequence of the PITBOLI measures. Particularly noteworthy is the project launch in August 2021 for the implementation of a new digital omnichannel architecture, a reduction in the “time to market” (period from product design to shelf) by around 50% to 32 weeks beginning November 2021, the completion of the outsourcing of logistics in the fourth quarter of 2021 and the introduction of sourcing for a short-term response to market developments.
The decisive factors now are continuing stable sales developments despite the Covid 19 pandemic as well as a consistent continuation of PITBOLI and the implementation of the North Star / Master Plan Strategy.