IC Group posts 3.2 percent revenue growth in FY16/17

Consolidated revenue for 2016/17 at IC Group amounted to 2,749 million Danish krona (439 million dollars) corresponding to a growth rate of 3.2 percent or 4.3 percent measured in local currency compared to 2015/16. The company’s gross margin declined by 1.5 percentage points to 55.3 percent and the consolidated operating profit for the year amounted to 125 million Danish krona (19 million dollars) against 243 million Danish krona (38 million dollars) last year resulting in an EBIT margin of 4.5 percent against 9.1 percent last year.

The company declared that board of directors will propose an ordinary dividend of 5 Danish krona (0.80 dollar) per eligible share corresponding to a total dividend of 85 million Danish krona (13.5 million dollars), at the Annual General Meeting.

Financial performance of brands in Q4

Revenue of Peak Performance for Q4 amounted to 121 million Danish krona (19 million dollars) corresponding to a growth rate of 10 percent or 11.9 percent measured in local currency driven by the wholesale channel and the retail channel due to new stores as well as revenue growth in existing stores. The company said, same-store revenue increased by 0.7 percent driven by physical stores. The revenue growth was realized in the Nordic region whereas revenue from outside the Nordic region declined. Peak Performance posted an operating loss of 44 million Danish krona (7.04 million dollars) compared to loss of 43 million Danish krona (6.8 million dollars) corresponding to a negative EBIT margin of 36.4 percent against negative EBIT margin of 39.1 percent last year.

Revenue from Tiger of Sweden declined by 7.8 percent or 5.6 percent in local currency to 200 million Danish krona (31 million dollars) due to the wholesale channel as a consequence of a reduction of the in-season selling. Revenue from the retail channel increased driven by e-commerce, however the same-store revenue declined by 3.5 percent driven by decline is sales at physical stores. The Nordic region, where a large part of the in-season selling is realized, reported lower revenue whereas revenue from rest of Europe and outside Europe increased. Tiger of Sweden realized an operating loss of 27 million Danish krona (4.3 million dollars) against profit of 10 million Danish krona (1.60 million dollars) corresponding to a negative EBIT margin of 13.5 percent against positive EBIT margin of 4.6 percent, last year.

Revenue from By Malene Birger amounted to 82 million Danish krona (13 million dollars), a rise of 2.5 percent or 4 percent in local currency, driven by the retail channel which reported revenue increases in both physical stores and e-commerce. Consequently, the same-store revenue increased by 7.5 percent. Revenue from the Nordic region increased whereas Rest of Europe reported a moderate reduction. Rest of the world reported revenue growth. By Malene Birger realized an operating loss of 7 million Danish krona (1.1 million dollars) compared to profit of 4 million Danish krona (0.6 million dollars) corresponding to a negative EBIT margin of 8.5 percent against positive EBIT margin of 5 percent last year.

Revenue from the group’s other brands was to 93 million Danish krona (14 million dollars), a decline of 7.9 percent or 7.6 percent in local currency. Saint Tropez reported lower revenue in Q4, whereas the revenue from Designers Remix was at the same level as last year. Other brands reported an operating loss of 5 million Danish krona (0.80 million dollars) compared to profit of 12 million Danish krona (1.92 million dollars), corresponding to a negative EBIT margin of 5.4 percent against positive EBIT margin of 11.9 percent in last year’s fourth quarter.

The gross profit for Q4 declined by 41 million Danish krona (6.5 million dollars) to 250 million Danish krona (39 million dollars), and the gross margin reduced by 6.5 percentage points to 50.7 percent.

Review of brand segment’s FY16/17 results

Peak Performance revenue of 1,035 million Danish krona (165 million dollars) for 2016/17 rose 10.6 percent or 11.6 percent in local currency compared to last financial year driven by both the wholesale and retail channels. Growth in the retail channel amounted to 15.1 percent and was driven by new store openings and e-commerce growth. The same-store revenue increased by 9 percent driven by the high ecommerce growth.

Revenue increased in all markets, but particularly in the four Nordic markets; Sweden, Denmark, Norway and Finland. The revenue growth rate amounted to 15.2 percent in the Nordic region. Revenue growth from Rest of Europe primarily derived from Austria and Switzerland whereas revenue growth from outside of Europe was primarily realized in Canada and Japan. The EBIT amounted to 101 million Danish krona (16 million dollars) compared to 94 million Danish krona (15 million dollars) for 2015/16 corresponding to an EBIT margin of 9.8 percent against 10 percent and was thus at the same level as last financial year.

During the year, Tiger of Sweden realized a revenue of 963 million Danish krona (154 million dollars), 0.9 percent lower compared to last financial year, but 0.6 percent higher in local currency. Revenue from the wholesale channel declined by 5.4 percent but increased 6.6 percent in the retail channel driven by new stores as well as high e-commerce growth. The same-store revenue (excluding outlets) increased by 1.4 percent driven by the strong e-commerce growth.

Revenue from the Nordic region declined by 4.6 percent – across all markets. Revenue from Rest of Europe increased by 22.4 percent primarily driven by 28 percent growth in Germany. Revenue from England was lower compared to last financial year whereas revenue from France was at the same level. Revenue from outside of Europe suffered a reduction. EBIT amounted to 67 million Danish krona(10.7 million dollars) against 108 million Danish krona (17 million dollars) corresponding to an EBIT margin of 7 percent compared to 11.1 percent last year.

By Malene Birger revenues were 351 million Danish krona (56 million dollars), a reduction of 1.7 percent or 0.4 percent in local currency. The reduced revenue is primarily attributable to the lower wholesale revenue but also the retail channel was negatively impacted by the development in physical stores during H1 2016/17. The same-store revenue (excluding outlets) increased by 0.6 percent driven by solid e-commerce growth, which was diluted by the development in the physical stores.

Revenue from the Nordic region increased by 2.3 percent driven by a positive development in Sweden and Norway whereas revenue in Denmark was at the same level as last financial year. Revenue from Rest of Europe was 4.4 percent lower compared to last financial year, however, with variations from market to market. Outside of Europe, Japan reported revenue reduction whereas all other markets reported revenue increases, and consequently revenue declined in total by 13 percent. EBIT amounted to 3 million Danish krona (0.48 million dollars) against 26 million Danish krona (4.16 million dollars) corresponding to an EBIT margin of 0.9 percent compared to 7.3 percent last year.

Revenue from other brands increased by 0.5 percent or 0.6 percent measured in local currency driven by Designers Remix which reported a revenue increase whereas the revenue development in Saint Tropez was unsatisfactory. Growth was realized in the wholesale channel whereas the development in the retail channel was negative in respect of both brands. E-commerce revenue increased by 10percent. EBIT amounted to 10 million Danish krona (1.60 million dollars) against 20 million Danish krona (3.20 million dollars) corresponding to an EBIT margin of 2.5 percent compared to 5 percent last year.

Outlook for the financial year 2017/18

For the financial year 2017/18, IC Group says, Tiger of Sweden revenue is furthermore expected to decline as a consequence of lack of focus on innovation and product renewal over an extended period while the gross margin will be affected negatively due to a more competitive price structure. These factors combined with costs in respect of the new management team as well as increased marketing will have a significant negative impact on earnings.

A moderate revenue and earnings growth is expected in Peak Performance while the company expects a moderate revenue decline but significant earnings improvement in By Malene Birger. For the group as a whole, the company expects to realize a minor revenue reduction compared to the financial year 2016/17 and an EBIT margin of approximately 5 percent.

Picture:Facebook/Peak Performance