Sales down but Charles Vögele manages to break even at EBIT level

Swiss fashion retailer, Charles Vögele made further progress last year in its turnaround amid challenging market environment. Following a good performance in the first half of 2014, during which the company managed to end the negative sales trend, the markets turned in September and declined in the fourth quarter of the year. However, owing to a better gross margin, Charles Vögele achieved break even at EBIT level and further reduced consolidated loss. This year, the company aims to focus on its profits while implementing the store format strategy.

Charles Vögele, operating 763 outlets in Switzerland, Germany, Liechtenstein, the Netherlands, Belgium, Austria, Slovenia and Hungary reported gross sales decline by 4.5 percent in fiscal 2014 to 1, 076 million Swiss franc (1,112.5 million dollars). After adjusting for exchange rates and like-for-like sales, the fall was 1.1 percent.

All sales regions suffered from intense competitive pressure and lower sales in September, October and November. This negatively affected the positive performance of the first half-year, in which the company was able to put an end to the like-for-like negative sales trend. Gross profit fell by 3 percent to 604 million Swiss francs (624.5 million dollars), but the gross profit margin went up due to better sales of higher margin goods and lower markdown. Larger gross profit margin and greater cost discipline led to rise in operating earnings at EBITDA level came to 41 million Swiss francs (42.3 million dollars). The consolidated loss was reduced further to 11 million Swiss francs (11.3 million dollars).

The markets in all four sales regions, Switzerland, Germany, Central East Europe (CEE) and Benelux, saw negative growth last year. Charles Vögele saw sales fall in all regions, though in Germany and CEE it did outperform the overall market. The clothing sector in Germany saw sales decline for the third year in a row, shrinking by 2.4 percent in 2014 and its gross sales in Germany fell 2 percent or 0.4 percent after adjusting for changes in exchange rates and like-for-like performance. Its performance was thus better than the industry average in Germany.

Gross sales in the CEE Region fell by 9 percent in 2014. This fall is due mainly to the withdrawal from Poland and the Czech Republic. After adjusting for currency movements and floor space, sales went up by 0.5 percent in the CEE Region. Gross sales in Austria fell by 0.9 percent after adjusting for changes in exchange rates and floor space. In Hungary, Charles Vögele once again easily outperformed the market with sales growth of 9.7 percent after adjusting for changes in exchange rates and floor space. Slovenia also contributed to the region’s positive performance with like-for-like growth of 0.6 percent.

For fiscal 2015, owing to the more challenging operating environment, Charles Vögele expects positive operating earnings at EBITDA level. Hans Ziegler, Chairman of the Board of Directors of Charles Vögele Holding is not standing for re-election at the Annual General Meeting on April 29, 2015. The board is now proposing to elect Max E. Katz as the new Chairman. Max E. Katz is currently Vice Chairman and has been a Board Member since 2012. The board has also proposed to elect Remo Masala as a new Member. The graduate with a degree in Business Administration, Masala is a proven expert in developing and implementing omni-channel marketing strategies, customer relationship management (CRM), brand management, content strategy and marketing effectiveness. In his current position he works as CMO for Thomas Cook.