Wolford revenues decline but earnings in positive

Wolford generated positive net earnings of 4.5 million euros (4.7 million dollars) in the first nine months of the 2014/15 financial year. Revenues declined slightly by 1.9 percent, but EBIT rose by nearly 5 million euros (5.2 million dollars) from 2.2 million dollars (2.3 million dollars) to 7.1 million euros (7.5 million dollars). EBIT adjusted for non-recurring income and expenses also improved from to 4.1 million euros (4.3 million dollars).

The company has attributed weaker development of revenues during the first nine months resulted from the previous closing of unprofitable points of sale and the difficult market conditions during the second quarter. In contrast, revenues in the third quarter generally matched the previous year. For the full-year, management confirms its goal to complete the operating turnaround with positive EBIT.

A relatively slow second quarter and weak November were followed by good development during the Christmas shopping season. Revenues rose by 4 percent year-on-year in December and by 2 percent in January. EBIT was slightly lower than the previous year in the third quarter at 3.9 million dollars (4.1 million dollars), above all due to higher rental and marketing expenses.

The company closed more than 20 unprofitable points of sale during the current and previous financial years, which reduced revenues. However, the Wolford-owned retail business was overall stable during the first nine months. The online business remained on a growth course with an increase of 17 percent. In contrast, the wholesale business decreased by 4 percent. This decline resulted from problems with individual retail partners and from the Ukraine crisis and the weak Ruble, which not only had a negative effect on Wolford’s direct business in this region, but was also felt through a sharp drop in Russian tourism to the major European cities. Revenues for the first nine months were positively influenced by 1.2 million euros (1.26 million dollars) of foreign exchange effects from the increase in the US dollar, British pound and Swiss franc versus the euro.

In the first nine months, seclines were recorded in Wolford’s key markets of Germany, Austria and France. Business in Wolford’s largest market, the US, declined slightly during the first nine months but later stabilized. Revenue growth was recorded in Italy and Spain and moderate growth in Great Britain. In Central and Eastern Europe, the Ukraine crisis led to a sharp drop in revenues. Revenues in the Asian market rose by 13 percent due to the opening of new points of sale and the expansion of the partner business as well as a like-for-like increase in the retail business.

The closing of unprofitable points of sale was contrasted by the opening of new locations in key strategic cities like Barcelona, Florence and Frankfurt. Wolford also opened a new flagship store on Munich’s Weinstrasse at the beginning of March. In January, Wolford’s management board team was complete – with Ashish Sensarma joining as the new Chief Executive Officer, responsible for marketing and sales.