Wolford Aktiengesellschaft

EANS-News: Wolford announces positive results for the first half-year 2014/15

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quarterly report

- Sound earnings growth and positive net earnings
- Revenue slightly below previous year
- Further optimization of solid balance sheet structure
- Substantial strengthening of marketing activities
- Goals for full-year confirmed
 
Vienna/Bregenz, December 12, 2014. Wolford AG, which is listed on the Vienna
Stock Exchange, generated clearly positive net earnings in the first half-year
(May to October 2014) for the first time since 2011/12. Despite a slight decline
of 2.9%, or EUR 2.18 million, in revenues to EUR 72.63 million, EBIT rose by
more than EUR 5 million from EUR -2.30 million to EUR 3.17 million. After an
adjustment for non-recurring income and expenses, adjusted EBIT turned from EUR
-2.30 million to EUR 0.04 million. Earnings after tax improved significantly
from EUR -1.96 million to EUR 1.38 million. The revenue decline resulted from
two factors: the closing of unprofitable points of sale and a sudden downturn in
the fashion and retail branch in Europe and the USA since September. The sound
earnings improvement was supported by the steady implementation of optimization
measures and special effects. Management confirms the goal to complete the
operating turnaround in this financial year with positive EBIT. "2014/15 is a
year of transition, when we create the basis for future profitable growth",
emphasizes Axel Dreher, Speaker of the Wolford Management Board.
 
Sudden downturn in the fashion and retail trade since September
 
Wolford has been confronted with increasingly difficult market conditions since
September. Revenues in fashion and retail trade in the most important European
and North American markets fell week for week, in part at double-digit rates -
following a general decline in consumer confidence as a reaction to global
crises and the unusually warm autumn weather across large parts of Europe.
Positive development in August was followed by a sharp drop in revenues for the
German fashion trade that reached 9% in September and 10% in October. Similar
declines were recorded on the markets in France and Great Britain, and retail
sales in the USA have been on a downturn since this past spring.
 
Wolford performed comparatively well in this difficult environment during the
first half of the 2014/15 financial year - despite the EUR 2.4 million reduction
in revenues from the closing of points of sale. Revenues in the retail business
rose slightly by 1% during the first six months. Wolford's online business
remained on a sound course with growth of 24%. In contrast, the wholesale
business declined by 8% because of a substantial decline in orders by partners
in reaction to the weakness in consumer spending and lower customer frequency.
 
Different regional developments
 
The development of revenues in the first half-year differed substantially by
region, in part due to the closing of individual points of sale. Stronger
declines were recorded in Wolford's key markets of Germany (-5%) and the USA (-
7%). France also reported a decline (-6%), but revenues were substantially
higher in Italy (+11%) and Spain (+15%). Revenues in Great Britain were at the
previous year's level. Lower revenues were recorded in Scandinavia, but here the
Wolford-owned retail business grew clearly on a like-for-like basis (excluding
the effects from the opening or closing of locations). Revenues in Central and
Eastern Europe fell significantly
(-19%) due to the Ukraine crisis. These markets have only been responsible for
4% of Wolford's revenues to date, but the absence of Russian tourists due to the
devaluation of the Rubel has had a negative effect on business in the major West
European cities. In Asia, Wolford increased revenues by 10% based on the opening
of new own and partner-operated locations and a like-for-like increase in its
own retail business. Asia currently generates 5% of Group revenues.
 
Substantial improvement in operative results
 
Earnings showed sound development during the first half-year with an improvement
in adjusted EBIT from EUR -2.30 million to EUR 0.04 million. "This positive
adjusted EBIT resulted
from the sale of a lease option in Switzerland and from the steady
implementation of optimization measures. We were able to realize further savings
of EUR 1.29 million from the reorganization of our product development,
production and logistics processes", explaines Chief Financial Officer Thomas
Melzer. "At the same time we spent EUR 0.83 million more on marketing to
sustainably strengthen our brand and create the basis for future growth", adds
Melzer. The sale of non-core land generated a book gain of EUR 3.37 million, and
supported an improvement of more than EUR 5 million in EBIT from EUR -2.30
million to EUR 3.17 million. Earnings after tax turned positive and totaled EUR
1.38 million, compared with EUR -1.96 million in the previous year.
 
Solid balance sheet structure
 
The asset and capital structure of the Wolford Group remains very solid. Equity
totaled EUR 76.22 million as of October 31, 2014 (October 31, 2013: EUR 75.90
million). Net debt was reduced from EUR 25.64 million in the previous year to
EUR 20.66 million as a result of the sale proceeds. The equity ratio equaled
51%, compared with 50% as of October 31, 2013, and gearing declined to 27%
(October 31, 2013: 34%).
 
Significant progress on strategic refocussing
 
Wolford has made substantial progress with the implementation of its strategic
refocussing during the past months. The closing of points of sale was contrasted
by a number of new openings to eliminate further "blank spots" on the company's
map. Seven new own locations were opened in the first half-year alone, in key
strategic cities like Barcelona, Florence and Frankfurt. These locations are
complemented by ten new boutiques operated by partners - for example in the
Chinese city of Zhengzhou, in Riga and Ulan Bator - as well as new shop-in-
shops, among others, in Taipei, Hong Kong and Beijing.
 
The marketing campaign that started this spring has also gained speed. Wolford
further strengthened its media presence in core markets like the USA, France and
Italy and, during the weeks before and after Christmas, is prominently pictured
on New York's Times Square. The company is also continuing to expand its online
marketing, among others with the support of innovative campaigns with an art and
culture focus. "Wolford as a brand has regained visibility - both online and
offline", emphasizes Axel Dreher. "It's no coincidence that our company already
has more than 140,000 Facebook fans as well as a large number of followers in
other relevant social media channels", adds Dreher. At the beginning of November
Wolford filled the position of creative director with Grit Seymour, a well-known
international designer. This position was created as part of the strategic
refocussing and plays a key role in the sustainable strengthening of the brand -
both with a view to future collections and the way Wolford is presented to end
customers.
 
Goal for 2014/15 financial year confirmed
 
The operating turnaround remains the primary goal for the current financial year
and is confirmed by the Management Board. "We are on a good course to generate
positive EBIT in the current financial year. Our progress would have been much
more evident also in terms of revenues without headwinds from the market",
underscores Thomas Melzer. In order to stabilize revenues, Wolford took active
steps and introduced a number of sales promotion measures. "We also
substantially strengthened our visual merchandising in the shops with the start
of the Christmas shopping season. In January, we plan to introduce the next
growth impulse with the presentation of our reshaped fall-winter 2015/16
collection", adds Axel Dreher.
The report on the first half-year 2014/15 is available under company.wolford.com
/ Investor Relations.
http://company.wolford.com/wp-content/uploads/2014/12/
Wolford_HY_Report_2014_15.pdf
 
 
Wolford Group Key Data


                                 1st half-year  1st half-year
Earnings Data                    05 - 10/14     05 - 10/13     Chg. in % 2013/14
Revenues            in EUR mill. 72.63          74.81          -3        155.87
EBITDA adjusted 1)  in EUR mill. 4.23           1.64           >100      7.11
EBIT adjusted 1)    in EUR mill. 0.04           -2.30          >100      -0.97
EBIT                in EUR mill. 3.17           -2.30          >100      -4.72
Earnings before tax in EUR mill. 2.72           -2.90          >100      -5.89
Earnings after tax  in EUR mill. 1.38           -1.96          >100      -2.81
Capital expenditure in EUR mill. 5.44           4.42           +23       7.87
Free cash flow      in EUR mill. -3.87          -9.64          +60       -0.97
Employees (on
average)            FTE          1,567          1,562          0         1,562
                                                                          

                                                                  
Balance Sheet Data               31.10.2014 31.10.2013 Chg. in % 30.04.2014
Equity              in EUR mill. 76.22      75.90      0         74.38
Net debt            in EUR mill. 20.66      25.64      -19       17.04
Working capital     in EUR mill. 39.97      43.00      -7        33.72
Balance sheet total in EUR mill. 148.14     150.91     -2        138.12
Equity ratio        in %         51         50         -         54
Gearing             in %         27         34         -         23
                                                                  

 

1) Adjusted for non-recurring income of EUR 3.37 million and non-recurring
expenses of EUR 0.25 million in the 1st half-year 2014/15
 
 
 
About Wolford AG
 
Wolford AG, which is headquartered in Bregenz on Lake Constance (Austria),
operates 16 subsidiaries and markets its products in roughly 60 countries
through 270 monobrand stores (own and partner-operated), approximately 3,000
trading partners and online. The company, which has been listed on the Vienna
Stock Exchange since 1995, generated revenues of EUR 155.87 million in the 2013/
14 financial year (May 1, 2013 - April 30, 2014) and has about 1,560 employees.
Since its founding in 1950, Wolford has become a leading global manufacturer's
brand in the segment of luxury legwear, exclusive lingerie and high quality
bodywear.

Further inquiry note:
Wolford AG
Regine Petzsch
Tel.: +43 5574 690 1359
mailto:investor@wolford.com
Web: company.wolford.com

end of announcement                               euro adhoc 
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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
 

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