Loss-making Wolford sees H1 e-growth, adds new products, expects break-even
Wolford’s first half was hit by the Covid crisis, but the company still said its sales “stabilised” and its loss narrowed, with break-even for 20201 now “within reach”.
The company now has a new, shorter FY20 that only runs from May up to December and in the year's first six months, it was coming out of a period that had been marked by store closures in many markets. While stores in EMEA and the US were open again in late April and early May, and in China as early as February, “customer frequency and buying behaviour did not normalise” at all during the reporting period.
Yet the company still managed to report sales of €48.17 million in the six month from May to October, which was down around 20% year-on-year. That meant a fall of almost €12 million, but it was a drop that was actually smaller than the company had expected.
The company remains loss-making, but at €11.28 million, the loss for the period (before taxes) was lower than the €12.03 million loss of a year earlier. And that didn't include the €72 million boost that the company got from the sale of real estate. It's used the money from that transaction to pay off its debt. But if you include the property transaction in its pre-tax earnings figure, it comes to a profit of €30 million.
So what else happened during the six-month period? The company said that the SS20 and AW21 collections “were very well received in all channels despite the current situation”.
And encouragingly, it added that its online operations grew by 54%. E-commerce was actually the main growth driver in the reporting period and the 54% increase helped the revenue share of e-tail across its own and wholesale partners’ webstores increase to around 25% of its total.
Business with e-tailers and marketplaces has been growing at double-digits rates, and is “expected to grow as well in the following year”.
Wolford is also “expecting further positive sales effects” from the partnership with a new distributor in Japan, as well as from its “planned expansion of the omnichannel architecture”.
The company has been working its way through its restructuring programme, known as PITBOLI (Programme for Immediate Top and Bottom Line Impact), and said that this is “systematically delivering its intended effects on revenue and efficiency”. In the first half, the programme saw it cutting costs by 12% — or €7 million — year-on-year, which was well above target.
There was a lot happening on the product from too. The company sold more than 630,000 Wolford Care Masks and has generated revenue of €9 million through these sales to date. It started production back in March and “as a new accessory, the different styles of the Wolford Care Mask have become a must-have of the Wolford product range,” it said.
And the PITBOLI strategy isn’t only about stripping out costs. During H1, it also led to the launch of The W and W lab lines. And its collaboration with Adidas has “significantly exceeded expectations”, while it has been helped by the launch of The W on Farfetch.
Meanwhile, a relaunch of the Essential Collection has also started with its full implementation happening in the next few months as the company rolls out targeted campaigns.
Wolford also said that with the Aurora Monogram line, which is part of the The W collection, it’s further implementing its commitment to sustainability. All new Aurora Styles are ‘Cradle to Cradle Gold Certified’ as part of its goal of being the first environmentally neutral brand in the fashion industry.
But while the company has lots going on and plenty to look forward to, it's not getting ahead of itself and said that despite strong half-year results, it “has been clearly feeling the effects of the second wave of lockdown measures since the end of October, which have hit retail during what is traditionally the strongest quarter”.
The effects are expected to be felt “well into the coming year”, but it still thinks it can reach break-even in that year, “assuming that our expectations regarding the development of the Covid-19 pandemic remain valid”.
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