EANS-News: Wolford AG: Revenue Growth and Lower Earnings in the First Quarter
--------------------------------------------------------------------------------
Corporate news transmitted by euro adhoc. The issuer/originator is solely
responsible for the content of this announcement.
--------------------------------------------------------------------------------
quarterly report
* Increase in revenues due to currency effects
* Weaker earnings impacted by one-off effects
* Positive development in retail and online business
* Progress in the strategic realignment of the company
* Full-year targets confirmed
Vienna/Bregenz, September 14, 2015: Wolford AG, which is listed on the Vienna
Stock Exchange, significantly increased revenues in the first quarter of the
2015/16 financial year (May - July 2015). Thanks to positive currency effects,
revenues rose 6.5% from the prior-year quarter to EUR 34.0 million. The USA, the
most important sales market for Wolford, and Great Britain grew even excluding
currency tailwinds. The earnings development is impacted by one-off effects in
the previous year, which distort the performance of the company. Reported
operating results (EBIT) in the first quarter amounted to EUR -3.0 million
(previous year: EUR +3.1 million), whereas earnings after tax in the first three
months of 2015/16 totaled EUR -2.6 million (previous year: EUR +1.5 million).
The positive results in the prior-year quarter can be attributed to two one-off
effects which led to proceeds of 7.4 million for the company. Adjusted for all
one-off effects, operating results were marginally higher than in the previous
year, although Wolford faced considerably high rental and lease payments,
especially in the USA and Great Britain, as a result of the appreciation in
value of the US dollar and British pound. Moreover, there was a slight increase
in the number of employees working in the Wolford Group.
These developments correspond to internal expectations for the seasonally weak
first quarter. Wolford is making good progress in its strategic reorientation,
laying the groundwork for increasing revenues and improved earnings in the
decisive autumn and winter months. For this reason, the company continues to
expect a rise in revenues and positive operating results for the entire 2015/16
financial year.
Growing retail business, more than 50% increase in online sales
Revenues with Wolford-owned retail stores climbed 8% both in absolute terms and
on a like-for-like basis. This segment still expanded by 2% even excluding
currency tailwinds, confirming Wolford's strategy of strengthening its own
retail business. The wholesale segment reported a slight 2% decline in revenues
compared to the prior-year quarter as a result of problems faced by individual
retail partners and also due to the replanning of delivery deadlines for parts
of the autumn/winter collection. Once again Wolford's own online business
developed very successfully, with revenues up by close to 58%.
Uneven regional revenue development
The USA, the most important sales market, as well as Great Britain developed
particularly positively in the first quarter, both generating double-digit
growth rates, and even posting growth adjusting for currency effects.
Spain, Italy, Netherlands and Belgium also saw revenue growth. The markets of
Germany, Austria and France, which are all important for Wolford, reported
single-digit decreases in revenues, clearly suffering from the massive drop in
customer frequency starting in July as a result of the long heat wave in Europe.
Central and Eastern Europe saw a double-digit drop in revenues, whereas Wolford
achieved strong revenue growth in Asia.
Negative operating results, but ongoing solid balance sheet structure
Operating results (EBIT) fell by about EUR 6 million in a quarterly comparison
to EUR -3.0 million. The underlying reasons were two one-off effects in the
first quarter of 2014/15, namely proceeds of EUR 4.0 million in the previous
year relating to the sale of a lease option in Switzerland, accompanied by a
book gain of EUR 3.4 million relating to the disposal of non-core land,
resulting in total additional income of EUR 7.4 million in the prior-year
quarter. Up until now Wolford has only realized a book gain of EUR 1.1 million
in the current financial year due to the sale of employee apartments. Adjusted
for all non-recurring effects, EBIT was EUR 0.1 million higher than in the first
quarter of 2014/15, although Wolford reported rising personnel and other
operating expenses, mainly higher rental and freight costs within the context of
the appreciation in value of the US dollar and British pound.
After capitalizing deferred tax assets to the amount of EUR 0.8 million,
earnings after tax totaled EUR -2.55 million, compared to EUR +1.49 million in
the previous year. Earnings per share equaled EUR -0.52, down from the prior-
year level of EUR 0.30. "A quarterly comparison shows a distorted picture of
our operational development, in light of the fact that we generated non-
recurring income of more than seven million euros in the previous year", says
Axel Dreher, COO and acting CFO since August 2015. "In addition, the months of
May to July are always the weakest sales months for Wolford. Accordingly,
earnings are in line with our expectations."
The Wolford Group continued to boast a sound asset and capital structure as of
the balance sheet date of July 31, 2015. The balance sheet total increased to
EUR 150.58 million compared to EUR 147.44 million at the end of the 2014/15
financial year on April 30, 2015 as a result of higher inventories and higher
deferred tax assets. Equity of the Wolford Group on the balance sheet date of
July 31, 2015 amounted to EUR 72.47 million, a drop of EUR 2.36 million from the
comparable figure at the end of 2014/15. As a result, net debt rose from EUR
17.12 million to EUR 25.98 million as of July 31, 2015. The equity ratio was 48%
(July 31, 2014: 53%), and gearing equaled 36% (July 31, 2014: 24%).
Progress in strategic refocusing
The newly structured Management Board team and the employees continue to focus
on resolutely aligning Wolford's business model to the needs of the retail
segment in order to be able to fully exploit the strengths of its monobrand
stores in the future. For example, the company systematically streamlined its
Essentials collection, creating key pre-requisites for a "never out of stock"
product line. The number of stock keeping units in the autumn/winter collection
currently available on the market was cut by close to 20%, which in turn reduces
complexity, optimizes the presentation at the point of sale and increases
product availability.
Wolford also made headway with respect to the internationalization and
optimization of its multi-channel distribution. In contrast to the general trend
in the luxury goods sector, revenues in China and Hong Kong were up by close to
40% in the first quarter. Both the 2015 summer collection and the current 2015/
16 autumn/winter collection have met with exceptionally positive feedback in
Asia. Furthermore, since the end of August Wolford has also been represented on
Tmall, the largest online shopping platform in China used by well-known brands
such as Gucci and Burberry to market their products. At the same time, Wolford
is working on expanding its sales and distribution capabilities in Eastern
Europe and the Middle East, where Wolford has initiated negotiations with two
potential master franchise holders. Following a corresponding startup phase,
these partnerships offer substantial potential for revenue growth.
Confirmed targets for 2015/16
The seasonally weak first quarter does not allow reliable conclusions to be
drawn about the company's performance in the current financial year. "The main
season is still ahead of us. We are making good progress in our strategic
realignment efforts and have taken the necessary steps to increase revenues and
earnings in the decisive autumn and winter months", emphasizes Ashish Sensarma,
CEO of Wolford. After the heat wave in Europe came to an end, Wolford once
again reported increasing retail sales in this region. Against this backdrop,
the company is still planning to further raise revenues and conclude the 2015/16
financial year with positive operating results.
The report on the first quarter of 2015/16 is available at company.wolford.com /
Investor Relations:
http://company.wolford.com/wp-content/uploads/2015/09/Wolford_Q1-
Report_2015_16_EN.pdf
Earnings Data 05 - 07/15 05 - 07/14 Chg. in % 2014/15
Revenues in EUR mill. 33.98 31.91 +7 157.35
EBIT in EUR mill. -3.04 3.02 >100 2.17
Earnings before tax in EUR mill. -3.33 2.79 >100 1.21
Earnings after tax in EUR mill. -2.55 1.49 >100 1.03
Capital expenditure in EUR mill. 1.99 2.07 -4 10.97
Free cash flow in EUR mill. -8.76 -1.03 >100 -0.54
Employees (on average) FTE 1,583 1,555 +2 1,574
Balance Sheet Data 31.07.2015 31.07.2014 Chg. in % 30.04.2015
Equity in EUR mill. 72.47 75.99 -5 74.83
Net debt in EUR mill. 25.98 17.95 +45 17.12
Working capital in EUR mill. 39.76 38.11 +4 38.14
Balance sheet total in EUR mill. 150.58 142.54 +6 147.44
Equity ratio in % 48 53 -9 51
Gearing in % 36 24 +50 23
Stock Exchange Data 05 - 07/15 05 - 07/14 Chg. in % 2014/15
Earnings per share in EUR -0.52 0.30 >100 0.21
Share price high in EUR 23.98 24.05 0 24.12
Share price low in EUR 22.05 18.75 +18 18.75
Share price at end of
period in EUR 22.37 23.00 -3 24.00
Shares outstanding
(weighted) in 1,000 4,900 4,900 0 4,900
Market capitalization
(ultimo) in EUR mill. 111.85 112.70 -1 120.00
About Wolford AG
Wolford AG, which is headquarters in Bregenz on Lake Constance (Austria) has 16
subsidiaries and markets its products in more than 60 countries through 270
Monobrand points of sale (company-owned and partner-operated), approx. 3,000
distribution partners and online. The company, which has been listed on the
Vienna Stock Exchange since 1995, generated revenues of EUR 157.4 million in the
2014/15 financial year (May 1, 2014 - April 30, 2015) with roughly 1,570
employees. Since its founding in 1950, Wolford has grown to become the leading
global brand for luxurious legwear, exclusive lingerie and high-quality
bodywear.
Further inquiry note:
Wolford AG
Maresa Hoffmann
Referentin Investor Relations and Corporate Communications
Tel.: +43 5574 690 1258
investor@wolford.com | company.wolford.com
end of announcement euro adhoc
--------------------------------------------------------------------------------
company: Wolford Aktiengesellschaft
Wolfordstrasse 1
A-6900 Bregenz
phone: +43 (0) 5574 690-1268
FAX: +43 (0) 5574 690-1219
mail: investor@wolford.com
WWW: company.wolford.com
sector: Textiles & Clothing
ISIN: AT0000834007
indexes: ATX Prime, ATX Global Players
stockmarkets: free trade: Frankfurt, regulated dealing: Wien, ADR: New York
language: English
