Retail segment sales boost Q1 revenues at Gerry Weber

Gerry Weber International managed to increase its sales revenues by 1.1 percent to 192.4 million euros (202.7 million dollars) in the first quarter of 2014-15. The company’s own retail segment was the main growth driver and recorded an 8.5 percent increase in revenues to 106 million euros (111.6 million dollars). However like-for-like retail revenues in the quarter declined by 2.3 percent.

The German fashion industry recorded a decline in sales of approximately 5 percent during this period. Sales to its retail partners declined by 6.8 percent owing to lower-than-expected sales and higher inventories. In addition, the depreciation of the rouble and the resulting increase in consumer prices in Russia had an adverse impact on the wholesale segment’s revenues. The retail segment’s growth led to improvement in the gross result by 6 percent. Accordingly, the gross margin climbed from 53.9 percent to 56.5 percent.

As EBITDA remained unchanged at 24.2 million euros (25.4 million dollars), EBIT were down by 4.5 percent and the EBIT margin dropped from 9.6 percent to 9.1 percent. The margin in Q1 2014/15 was primarily influenced by the increase in depreciation/amortisation and the early start of the winter discounts.

In the coming months, the company will continue its retail expansion. The first Canadian House of Gerry Weber will be opened at the Yorkdale Center before the end of March 2015. Another seven stores in Greater Toronto will follow in the course of the year.

“We will open our own Gerry Weber branded stores in Canada and check the options for our retail segment’s market entry in the USA. Together, we will greatly accelerate the expansion of Hallhuber in order to achieve a significant improvement in profitability,” said Ralf Weber, CEO of Gerry Weber International.

Starting February 2015, fashion company HallHuber is expected to contribute to the growth of the group. According to the preliminary figure, sales revenues increased about 25 percent in the financial year 2014 and the HallHuber management projects a further increase between 16 percent and 20 percent for the current financial year. Accordingly, it is expected to contribute between 110 million euros (115.8 million dollars) and 120 million euros (126.4 million dollars) to the Gerry Weber Group’s sales revenues during the period from February to October 2015.

A key focus of the cooperation between Gerry Weber and Hallhuber will be on expanding the latter’s distribution channels. It originally expected to add some 37 new sales spaces in the financial year 2015 without the support from Gerry Weber, however with the use of Gerry Weber’s distribution structures is now expected to increase the originally planned number of 37 new stores to 50 to 60. Most of these additional new stores will be opened in the second half of the year. The regional focus will be in Germany, UK and Spain as well as Scandinavia.