Gerry Weber keeps smiling despite sales fall, says turnaround is on track
It’s not been an easy time for former womenswear powerhouse Gerry Weber of late but the company was upbeat this week even though it had to report lower sales and profits for the six months to April 30.
Why all the cheerfulness at the german mid-market fashion giant? Well, its turnaround actions are intensifying and the company says it believes they’re paying off.
If that view is correct, it would be good news not just for the firm but for the more conservative end of the womenswear market as a whole. It’s an unforgiving world out there and the customers this market segment could once rely on now have so much choice - from pureplay e-tailers to retailers that give them what they want at a lower price, from re-energised department store own brands to a new breed of stores and brands targeting a mature customer who’s less trend-agnostic than she once was.
So let’s look at the reasons for Gerry Weber’s confidence. In the half-year period, its earnings plunged 43% to €1.7m, although profit on an ebitda basis was down just 3.3% to €28.9m.
Revenues were down by 3.6% to €427.8m, although given that the company has closed 115 stores under its ‘Fit4Growth’ restructuring plan, that’s not much of a shock. The company said that its core retail segment revenues fell 6.8% to €192.3m and it described its comparable sales as stable, despite a 3.4% drop in Q1. Perhaps the smaller 1.5% Q2 fall gave it cause for optimism, although the 2.1% fall in wholesale turnover wasn’t good news.
But there were some undeniable bright spots in the earnings report.. Smaller brand Hallhuber is growing and now accounts for 22% of total revenues with sales of €92.9m. And online sales are buoyant. They rose 11.6% and made up 7.2% of the total. While that’s not a huge percentage compared to some of the firm’s peers, it’s better than the 6% of a year ago.
CEO Ralf Weber said this was all “fully to plan, which makes us optimistic that we will reach the objectives we have set ourselves for the full financial year.” He said the firm’s early actions to address its problems mean its products are resonating with consumers and wholesale partners with its success also being seen on the cost control side.
So what does that all mean for the future? For start, the company is sticking by its full year sales prediction of €864.8m-€882.8m, down from sales of €900.8m total year ago. It will also implement new merchandise management schemes and try out more new ideas. We don’t know what those ideas are yet but we’re watching with interest.
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