May 14, 2019
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Tiger of Sweden and By Malene Birger continue to struggle in latest period

May 14, 2019

IC Group reported its latest set of results on Tuesday and while it was clear that it was hurt by costs related to its on-going transformation plan, it was also clear that its two core brands have plenty of work to do before they're back to full health.

By Malene Birger

The company said revenue for its continuing operations in the nine months to the end of March was down 11.2% to DKK827m (€110m/£96m/$124m). That was a 9% fall on a currency-neutral basis. Q3 group revenue fell to DKK249m from DKK301m.

Operating profit before certain one-off items and central costs for the nine months fell to DKK22m from DKK79m, with an EBIT margin of just 2.7%, down from 8.5%. And the overall operating loss was DKK13m with an EBIT margin of -1.6%, much worse than +10.8% a year earlier.

The group, which has been selling some brands, now comprises the premium Tiger of Sweden and By Malene Birger labels.

Tiger’s revenue fell 11.6% on a reported basis, or 9.2% currency neutral, to DKK594m for the nine months, with operating profit down sharply to DKK26m from DKK62m. Meanwhile Malene Birger’s revenue fell 9.7% reported to DKK233m, or 8.6% currency neutral. Its operating loss was DKK4m, down from a DKK17m profit a year earlier.


Tiger, which has had an interim CEO (Moa Strand) since February due to the dismissal of former chief Hans-Christian Meyer, said its recruitment process for a new permanent CEO “is proceeding satisfactorily”. And that's good news because the brand continues to struggle, even though it’s executing the new strategy it had announced just a month before its CEO’s departure.

That’s clearly causing some disruption. Although its nine-month revenue was down by the aforementioned 11.6%, its Q3 revenue fell as much as 20.7%. The company blamed a 26.2% fall in wholesale, although it said this was more to do with delivery timing than anything else. On an adjusted basis, the decline would have been only 12.8%, yet that’s still worse than the 11.6% figure. 

Tiger’s retail channel saw a revenue reduction of 10.5% and like-for-like revenue fell 9.9% as its physical stores struggled.

However, during the nine months, the brand did generate revenue growth internationally, even though it wasn't enough to counteract the decline in the Nordic markets.

That Nordic issue is being addressed by the new strategy that includes increased digitalisation as well as a strengthening of distribution control in key markets in the Nordic region. It has ended agency agreements in Norway and Finland and sales will be handled in future by the group’s own sales organisation.

Meanwhile, By Malene Birger also saw revenue falling and is also working on a new approach to its business. In particular it has been concentrating on “enhanced cost control” and is also speeding up its digitalisation as it works to boost its e-commerce operations.

Its performance in the nine-month period looked poor, but its decline slowed down in Q3 with the 9.7% drop of the nine months narrowing to an 8.3% fall in the quarter. That said, while like-for-like sales improved from a 13.9% drop in the first three quarters of the year, they still fell again in Q3, albeit ‘only’ by 5.2%.


At group level, while the financial results don't look good, IC said that its transformation “is being executed faster and more efficiently than planned which should mean that one-off costs this year and next are reduced.

Performance wise, for Q4 and the full year, the company is now predicting “a minor revenue reduction measured in local currency” with the EBIT margin to sit between 1% and 2% prior to non-recurring costs linked to the transformation.

And where does that leave its two key brands for the rest of the year? The Tiger of Sweden brand should see “a minor revenue reduction and a moderate decline in nominal earnings,” while By Malene Birger should see a “moderate” revenue reduction and a “substantial decline” in nominal earnings.

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