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current news

Wolford Reports First Half € 6.62 Million Loss


(Filed Under Financial and General Interest News). Wolford AG, the Austria-based lingerie, hosiery and apparel public company, reported a loss of 6.62 million euros in its first half, covering the months May through October, 2017.

Meanwhile, sales rose by 3.7% compared to the same period last year, from 67.62 million euros to 70.15 million euros. During the same six months last year the struggling firm lost 8.07 million euros.

The company boasted that “following the revenue decline related to planning mistakes in the previous year, revenue in the first half of 2017/18 stabilized, both with respect to Wolford’s own retail operations as well as its wholesale business. Wolford-owned retail stores showed an increase of 1.9% or € 0,72 million, whereas the wholesale segment grew slightly by 1.2% or € 0.29 million. Revenue of the company’s own online business was up significantly by 32.6%, comprising a year-on-year increase of € 1.62 million, which can be attributed to successful marketing campaigns and improved profit availability once again.”

In its last full year, fiscal 2016/17, the company lost 17.88 million euros and the year before, 10.66 million euros.

In the first half of this year Wolford reported “revenue stabilized in almost all relevant markets. The Wolford Group generated a considerable increase in the USA (+3.7%), Germany (+2.8%), Italy (+8.5%), Austria (+8.2%), Spain (+7.9%), Belgium (+5.6%), Switzerland (+5.4%) and in Scandinavia (+2.9%). Wolford’s business in its Eastern European markets performed particularly well, recording a 36.6% rise in revenue. In contrast, revenue fell in France (-2.0%) as well as in Great Britain (-5.5%), above all within the context of Brexit uncertainties and the devaluation of the British pound.”

The company continued, noting that “restructuring measures are having an increasingly positive impact. In particular, a sustainable drop of € 3.66 million in personnel expenses was achieved, down to € 34.47 million in the first half-year. The average number of employees (full-time equivalents) in the first half of 2017/18 fell by 82 to 1,476 employees due to the reduction of administrative positions in European sales regions as well as the streamlining of administrative staff in Bregenz. Second-quarter personnel expenses alone were down € 2.28 million to € 17.03 million. This was reflected in positive operating earnings of € 1.04 million in the second quarter despite high non-recurring restructuring expenses.”

The company pointed out that “with the help of adjusted production planning, Wolford managed to reduce its excessive level of inventories from the previous year by € 7.53 million without notable sell-offs and bring them back to a normal level.”

Wolford, which operates a number of its own retail shops in North America and around the world, did not say it would be closing stores. But it did note “Additional measures to sustainably reduce costs are in preparation.”

It added, “the company is investing in laying the foundation for future revenue growth. Wolford strengthened its technical base in the online business and hired three new online specialists who are mainly active in the front-end segment with close customer proximity. The marketing budget was also restructured to systematically enhance the performance of its online business. Last but not least, our company filled the vacant positions of chief designer and director brand and marketing. This sets the conditions to the redirection and positive development of the brand and the company.”

Looking ahead to the full year, Wolford stated it “confirms its outlook. For the current financial year, the management has budgeted slight year-on-year revenue growth and continued negative operating earnings. It is known that a period of two years is planned for implementation of the restructuring measures aimed at improving earnings. The relevant measures will only take full effect starting in the 2018/19 financial year. Wolford anticipates renewed positive operating earnings starting in the 2018/19 financial year.”

In mid-summer the company’s main shareholder group announced its plans to sell its majority stake in the company. The terms of the sale, the size of the stake, nor the names of potential buyers were revealed. According to the brief statement June 9,2017, “The main shareholder group of Wolford AG, WMP Familien-Privatstiftung, Sesam Privatstiftung and its subsidiary the “M. Erthal & Co.” Beteiligungsgesellschaft m.b.H., as well as related parties announced today the intention to sell their stake, which is a majority stake, in Wolford AG. To this end, the shareholders are starting a process, which is supported by Deloitte Financial Advisory GmbH, for the selection of interested parties. Wolford AG will join this selection process. The purchase of the majority stake by a future core shareholder shall be combined with an equity financing transaction that shall strengthen the company’s liquidity on a long-term basis. The issue size has not yet been determined. Wolford is negotiating with the financing banks in order to secure the financing to meet the liquidity requirements up to that time.” — NM


more Financial and General Interest News >>

Published 12-29-2017 by Nick Monjo

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