Gerry Weber still facing tough times as hot summer derails Hallhuber progress
today Sep 14, 2018
Gerry Weber had plenty of bad news this week as it said “continuous market weakness and the hot summer” have hit sales and earnings figures hard.
In its latest nine-month period (to July 31), sales fell to €575.1 million from €620.1 million while pre-tax/pre-interest profit (EBIT) turned into a loss of €9.8 million after the company made a small profit of €0.2 million a year ago.
The blame for the 7.3% fall in group sales was firmly attributed to “the continuous structural weakness in the German and European trade in textiles, the exceedingly hot summer, which particularly affected subsidiary Hallhuber in the third quarter, ripple effects from store closures [from] the concluded Fit4Growth programme, as well as planned adjustments of the Gerry Weber business model as part of the Performance Programme announced in June.”
Hmmm. That doesn’t hold out a lot of hope for a speedy upturn as it seems almost everything that could go wrong is going wrong at the moment. But the company put a positive spin on it saying that “in light of the considerable sales decrease, earnings [are] holding up well.”
While that EBIT loss may not seem very encouraging, it said nine months adjusted EBITDA (that’s EBIT with depreciation and amortisation costs also excluded) was still a loss but was €5.1 million smaller at €31 million.
To be fair to the company, it did face some massive one-off challenges in Q3 specifically as the ultra-hot summer caused fashion sector devastation across much of Europe. Group sales in Q3 fell 11.4% to €170.4 million and Hallhuber sales dropped 8.1% to €43.9 million in the period. As well as “the loss of customer frequency as result of the hot summer,” the insolvency of a UK Hallhuber partner, and lower than planned sales due to a change in concept at a Swiss partner, also weighed on the figures.
But perhaps the company is justified in continuing to feel upbeat about Hallhuber as its nine-month results were much better. Sales rose 5.3 % to €148.2 million over the longer period and like-for-like sales rose 3.1%, outperforming the market as a whole.
Its a shame that the nine-month news wasn’t good across the rest of the company’s operations. Its Core Retail segment, including revenues of Gerry Weber, Taifun, Samoon and Talkabout, fell 14% to €250.9 million as the effects of the Fit4Growth store closures continued to be felt.
Wholesale for the group also declined by 6.2% to €176 million and the new Go-to-Market approach, with its “adjusted and shortened delivery rhythms,” resulted in a sales decline (as expected) in Q3.
But there was better new online as the Core brands rose 6.2 % to €22.1 million, and Hallhuber soared 37.5 % to €19.4 million.
“The unsatisfactory sales development strengthens our determination, to emphatically adjust our business model and drive this transformation, where possible, with even great vigour,” said CEO Ralf Weber.
“We have already made significant steps, although it will take time, until our progress will become visible in our results. Currently, we fundamentally change our thinking and mode of operation – without any taboos. It is the core of our Performance Programme to become faster, more flexible and at the same time more modern while entirely focusing on our customers.”
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