Charles Vögele sales decline amid difficult economic conditions

The Swiss fashion retailer Charles Vögele that made a significant progress in the last years and achieved turnaround on an operational level in 2014 has said that amid a very difficult market environment and tough economic conditions as well as difficult currency situation, its net sales fell 2.5 percent after adjusting for exchange rates and like-for-like. Net sales decreased 11 percent overall to 803 million Swiss francs (823 million dollars).

Charles Vögele blames challenging year for poor results

The company said that 2015 financial year presented the company with additional challenges like the abolition of the minimum euro exchange rate that severely affected results in Charles Vögele’s Swiss home market and caused negative currency translation effects in the other sales regions. After a good start to the second half of the year and a positive sales performance in the third quarter, business slowed due to unusually warm autumn in the fourth quarter.

Operating earnings at the EBITDA level decreased to nine million Swiss francs (9.2 million dollars) and EBIT to 51 million Swiss francs (52.2 million dollars). The consolidated loss increased as a result to 62 million Swiss francs (63.5 million dollars).

Performance in Germany better than the market

The Germany, CEE comprising Austria, Slovenia, Hungary and Benelux sales regions reported a stable sales performance in local currency terms last year. With a decline of 0.3 percent, Charles Vögele Germany performed slightly better than the market as a whole due to good sales in the summer, the trend that was positive in the first nine months, but neutralized by a decline in the final quarter of the year. Hungary significantly improved its sales and earnings for the second year in a row.

Despite the fall in sales from existing floorspace, progress was made in transforming the company last year. The main improvements were in core areas: range focus, merchandise management and implementing the store format strategy. By the end of 2015, 274 out of a total of 761 stores had been successfully converted and reconfigured. Another main focus for the company’s management last year was the development of the Fast-Track collection. Under the slogan “Create Yourself” Charles Vögele is offering a new programme every month with the aim of responding as quickly as possible to market trends. The new online shop also went live in August 2015 as a part of the company’s omni-channel strategy.

Outlook for 2016 remains challenging

The company said that the modernised spring collection 2016 was well received and makes it confident about the current financial year. In addition, bank loans worth 245 million Swiss francs (251 million dollars) that were due to expire in April have been extended, which secures the funding base for the company.

However, the company feels that 2016 will be another challenging year. The stubbornly low level of sales and the ongoing shake-out of the clothing market make structural cost adjustments inevitable, so the company’s management has launched the “CVision” transformation programme. For the current financial year the company expects a positive operating result at EBITDA level and a positive operating results at EBIT level in 2018.