EANS-News: Wolford AG: Cost Savings Partially Compensate for Revenue Decline
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Corporate news transmitted by euro adhoc with the aim of a Europe-wide
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Quarterly Report
Bregenz -
* Revenue down 9%
* New restructuring program launched with more than EUR 10 million saving
potential identified
* Market drive initiated for China
* Plan to return to profitability no later than in the 2020/21 financial year
Bregenz, March 15, 2019: Wolford AG, which is listed on the Vienna Stock
Exchange, generated revenue of EUR 108.2 million in the first nine months of
the current financial year, comprising a decline of 9.4% when compared to the
same period in prior year (EUR 119.4 million). The decrease in revenue equaled
9.0% when adjusted for changes in currency exchange rates. A large share of
the revenue decrease amounting to EUR 11.2 million could be compensated on the
earnings level thanks to the Company's initial success in substantially
reducing ongoing costs. As a result, operating earnings only deteriorated by
close to EUR 1 million from the same period in prior year. EBIT in the first
nine months of 2018/19 financial year amounted to EUR -2.3 million, compared
to EUR -1.4 million of the same period in prior year. However, as the
consequence of tax payments in arrears, earnings after tax totaled EUR -4,2
million for the first nine months of 2018/19 financial year, down from EUR -
2.6 million of the same period in prior year.
The revenue decline was a result of the Company's own retail (-7.8%) and
wholesale (-11.4%) business, and the online segment which reported a 10.2%
rise in revenue. Similar to physical stores of other fashion retailers,
Wolford is suffering from the ongoing global phenomenon of declining customer
frequencies. Moreover, Christmas sales were considerably below prior year
level. German fashion retailers together reported a 4% drop in revenue
according to Textilwirtschaft.
Declining fixed costs through optimization effort / Higher marketing expenses
to invest for future growth
The restructuring program carried out to date including streamlining of
corporate processes has clearly had a positive impact. Staff costs in the
first nine months of 2018/19 financial year showed a sustainable year-on-year
decrease of EUR 4.6 million to EUR 46.6 million. The average number of
employees (full-time equivalents) in the first nine months of 2018/19 finance
year was reduced by 102 people to 1,354. Other operating expenses also fell
substantially by EUR 2.6 million to EUR 39.5 million. In contrast, the cash
flow from investing activities rose to EUR -6.8 million in the reporting
period from EUR -0.8 million of the same period in prior year. In the first
nine months of 2018/19 financial year, Wolford made substantial investments in
its new brand identity and achieved important milestones in this regard. In
August 2018 the company rolled out its new display window concept, introduced
its new imagery at the end of last year and opened up a pilot store in
Amsterdam at the beginning of 2019, featuring a completely new shop concept.
The new brand identity is designed to make the brand attractive, above all for
younger consumers.
The equity ratio rose from 33% to 41% thanks to the successful capital
increase carried out in July 2018. As a result of a repayment of outstanding
bank loans, net debt was reduced from EUR 29.0 million as at January 31, 2019
to EUR 20.2 million as at the same period in the prior year.
Restructuring program will be continued
The Management Board has launched a new restructuring program in light of the
fact that the previous cost savings have been insufficient to fully compensate
for the revenue decline. For example, production capacities were already
reduced in January 2019. "We have always emphasized that our restructuring is
an ongoing process, and that internal structures have to reflect the current
revenue level", states Brigitte Kurz, Chief Financial Officer of Wolford AG.
The Management Board has identified considerable cost-savings potential in its
procurement process, amongst other areas. All activities including the
purchasing of external services will be bundled under a centralized purchasing
management. On the balance, the identified savings potential of all planned
restructuring activities clearly measure up to over EUR 10 million from now
until 2020/21 financial year.
Market drive in China
At the same time, the Company continues to work on growing revenue. This not
only encompasses its new brand appearance. For example, Wolford recently
presented details on the planned market drive in China. Starting on February
1, 2019, Fosun Fashion Brand Management Company (FFBM) as Wolford's new
partner in China fully support the company to manage its local brand
appearance. FFBM is a full-service provider focusing on marketing and sales of
luxury brands in China. The experienced team of FFBM has extensive contacts
and will ensure the cultural "fit" of Wolford's presence in this future market
featuring a steadily growing number of luxury-oriented consumers.
"We are intensively working on laying the foundation for renewed growth,
precisely where future growth is expected", says Wolford CEO Axel Dreher.
However, medium-term revenue generated in China should be comparable with
Wolford's present core markets of the USA (20% share of revenue) and Germany
(15%).
Outlook
The Management Board anticipates a loss in the current financial year in spite
of the positive cost-optimization effects generated by the restructuring
programme implemented to date. Against the background of ongoing market
weakness, the Management Board also announced the initiation of further
comprehensive restructuring measures at the end of February 2019 in order to
bring the cost structure in line with current revenue level. The identified
savings potential clearly exceeds EUR 10 million. With this in mind, the
Management Board plans for the company to return to profitability (positive
operating earnings) no later than in 2020/21 financial year.
The report for the first nine-months of 2018/19 financial year can be
downloaded under company.wolford.com [http://company.wolford.com/], Investor
Relations.
https://bit.ly/2F4WQ9Z [https://bit.ly/2F4WQ9Z]
Earnings 05/18 -01/19 05/17 -01/18 Chg. in % 2017/18
Data
Revenues in EUR mill. 108.15 119.36 -9 149.07
EBIT in EUR mill. -2.31 -1.36 -70 -9.22
Earnings in EUR mill. -3.30 -2.97 -11 -11.43
before tax
Earnings in EUR mill. -4.22 -2.57 -64 -11.54
after tax
Capital in EUR mill. 6.79 1.17 >100 1.40
expenditure
Free cash in EUR mill. -11.61 2.43 <100 1.83
flow
Employees FTE 1,354 1,456 -7 1,433
(on average)
Balance 31.01.2019 31.01.2018 Chg. in % 30.04.2018
Sheet Data
Equity in EUR mill. 51.38 42.90 +20 33.90
Net debt in EUR mill. 20.19 28.97 -30 30.09
Working in EUR mill. 37.55 42.78 -12 34.59
capital
Balance in EUR mill. 125.75 128.97 -3 114.33
sheet total
Equity ratio in % 41 33 +24 30
Gearing in % 39 68 -42 89
Stock Exchange 05/18 -01/19 05/17 -01/18 Chg. in % 2017/18
Data
Earnings per in EUR -0.64 -0.52 -23 -2.35
share
Share price in EUR 13.40 21.71 -38 19.75
high
Share price in EUR 10.90 10.03 +9 11.36
low
Share price at in EUR 11.00 13.90 -21 13.60
end of period
Shares
outstanding in 1,000 6,631 4,912 +35 4,912
(weighted)
Market
capitalization in EUR mill. 72.94 69.50 +5 68.00
(ultimo)
Further inquiry note:
Wolford AG
Maresa Hoffmann
Investor Relations & Corporate Communications
Tel.: +43 5574 690 1258
investor@wolford.com | company.wolford.com
end of announcement euro adhoc
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issuer: Wolford Aktiengesellschaft
Wolfordstrasse 1
A-6900 Bregenz
phone: +43(0) 5574 690-1258
FAX: +43(0) 5574 690-1410
mail: investor@wolford.com
WWW: http://company.wolford.com
ISIN: AT0000834007
indexes: ATX GP
stockmarkets: Frankfurt, New York, Wien
language: English
