Disappointing sales push IC Group to lower outlook

Consolidated revenue of the IC Group for the period from July 1, 2015 to March 31, 2016 amounted to 2,156 million Danish krona (327 million dollars) corresponding to an increase of 0.5 percent or 1.4 percent in local currency, compared to the same period last financial year. The company now expects the consolidated revenue for 2015/16 at the same level as last year while the EBIT margin is expected to be realised at approximately 9 percent.

Operating profit up 18.5 percent

The gross margin improved by 2 percentage points to 56.7 percent and the consolidated operating profit rose by 18.5 percent to 269 million Danish krona (40.8 million dollars), and the EBIT margin thus increased from 10.6 percent to 12.5 percent.

However, Peak Performance generated revenue of 264 million Danish krona (40 million dollars), a reduction of 7.4 percent or 6.9 percent in local currency. The company said, this reduction was driven by the wholesale channel. The revenue reduction was mainly registered in the Nordic region. The operating profit amounted to 38 million Danish krona (5.7 million dollars) corresponding to an EBIT margin of 14.4 percent.

Tiger of Sweden increased its revenue by 6.6 percent or 7.5 percent measured in local currency to 260 million Danish krona (39.4 million dollars) in Q3 2015/16. All channels reported revenue growth, particularly the e-commerce channel. The German market reported a revenue growth rate of 40 percent while the Nordic region generated revenue growth of 12.5 percent. The operating profit amounted to 38 million Danish krona (5.7 million dollars) corresponding to an EBIT margin of 14.6 percent.

Revenue from By Malene Birger declined by 8.5 percent or 7.7 percent measured in local currency to 97 million Danish krona (14.7 million dollars) compared to last financial year. Both the markets inside and outside the Nordic region reported reduced revenue. The operating profit amounted to 9 million Danish krona (1.3 million dollars) corresponding to an EBIT margin of 9.3 percent.

Revenue from the Group's other brands rose by 5.9 percent or 6.6 percent measured in local currency driven by a high growth rate in Designers Remix whereas Saint Tropez reported reduced revenue. However, the operating profit declined by 5 million Danish krona (0.7 million dollars) to a loss of 6 million Danish krona (0.9 million dollars) which is attributable to a lower gross margin as well as higher capacity costs in Saint Tropez in Q3 2015/16. The EBIT margin was negative by 6.7 percent.

Changes outlook for the financial year 2015/16

During H1 2015/16, a particularly positive revenue development was reported from the company’s own stores. However, since the beginning of H2 2015/16, IC Group has experienced a negative development in the retail trade across all brands and its partners and customers. This trend, the company said, deteriorated distinctively towards the end of Q3 2015/16 and continued into the month of April, and it has affected revenue from its own stores as well as the OTB sale (in-season sale). In addition, foreign currency translation effects had a negative impact on the reported revenue growth - primarily due to the lower exchange rate of Norwegian krona.

Based on the above, the company expect the consolidated revenue for 2015/16 at the same level as last year. As a consequence of the lower than expected revenue growth, it expects the consolidated operating profit to be realised with an EBIT margin of approx. 9 percent.

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