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Adolfo Domínguez reduces 9-month loss after namesake designer takes the reins

By Angela Gonzalez-Rodriguez

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Management |ANALYSIS

The Spanish fashion company reported losses of 11.9 million euros in the first nine months of its fiscal year. That’s 27 percent less than the 16.6 million euros it lost in the same period of the previous year.

Since the designer who founded and names the company took over the business last July, things seem to go better for the fashion retailer. Adolfo Domínguez took control of the group after the departure of former CEO Estanislao Carpio and the frustrated signing of ex-Inditex Costas Antimissaris as his replacement, recalls 'Expansion'.

During the nine months to November 30, Adolfo Dominguez was able to reduce his operating expenses, improve his net financial position and increase the gross margin obtained in 2016 by 4.6 percent over the previous year.

However, market sources point out, this improvement is also due in large part to the increase in non-recurring revenues (more than 17 percent).

Adolfo Domínguez reduces losses by 27 percent after the founder takes over

Another positive fact to note is the improvement in sales over comparable area, which grew by 3.6 percent in the period analysed. In contrast, the closure of 35 points of sale - including own stores, franchisees and corners - in 2016 meant a negative impact of 3.7 million, as the company pointed out in a communiqué to the National Securities Market Commission (CNMV).

This statement also alludes to the good performance of the company in the Mexican market, where sales have risen by 10 percent in local currency, something that is not reflected in the final balance due to the negative exchange rate effect.

Carlos Delso, professor at ISEM, believes that the latest results seem positive, "sales have bottomed out and the drastic cost reduction plan is beginning to bear fruit." The ISEM professor adds in an interview with ‘OKDiario’ that it is possible that the firm survived, "but I do not think that with this type of management that is so personalist and not in line with the demands of a multinational listed company can go very far."

In the first nine months of fiscal year 2016, Adolfo Dominguez recorded a negative ebitda of 8.8 million, after obtaining 1.04 million in the third quarter, compared to the negative 11.7 million recorded in the same period Of the previous year, highlights 'Expansion'. Meanwhile, the Ebit stood at -11.3 million, compared to 15.4 million in 2015, while its financial position improved to 2.1 million compared to the red of 19.4 million in the same period of 2015.

The market capitalisation of Adolfo Domínguez amounts to 31.7 million.

Photo:Adolfo Domínguez España

Adolfo Dominguez