Despite revenue decline, Wolford H1 earnings in positive

REPORT Wolford said that it generated positive net earnings in the first half-year from May to October 2014 for the first time since 2011/12. Despite a decline of 2.9 percent, or 2.18 million euros (2.71 million dollars) in revenues to 72.63 million euros (90.3 million dollars), EBIT rose by more than 5 million euros (6.2 million dollars) from below 2.30 million euros (2.86 million dollars) to 3.17 million euros (3.94 million dollars).

The company has attributed the revenue decline to the closing of unprofitable points of sale and a sudden downturn in the fashion and retail branch in Europe and the USA since September. Management confirms the goal to complete the operating turnaround in this financial year with positive EBIT.

Revenues in the retail business rose slightly by 1 percent during the first six months. Wolford‘s online business witnessed a growth of 24 percent. In contrast, the wholesale business declined by 8 percent because of a substantial decline in orders by partners in reaction to the weakness in consumer spending and lower customer frequency. By region, stronger declines were recorded in Wolford’s key markets of Germany with below 5 percent and the USA, below 7 percent. France also reported a decline of below 6 percent, but revenues were substantially higher in Italy at over 11 percent and Spain, over 15 percent. Revenues in Great Britain were at the previous year’s level. Lower revenues were recorded in Scandinavia, but the Wolford-owned retail business grew clearly on a like-for-like basis.

Revenues in Central and Eastern Europe fell significantly by below 19 percent due to the Ukraine crisis. These markets have only been responsible for 4 percent of Wolford‘s revenues to date, but the absence of Russian tourists due to the devaluation of the Rubel has had a negative effect on business in the major West European cities. In Asia, Wolford increased revenues by 10 percent based on the opening of new own and partner-operated locations and a like-for-like increase in its own retail business. Asia currently generates 5 percent of group revenues.

Wolford has made substantial progress with the implementation of its strategic refocussing during the past months. The closing of points of sale was contrasted by a number of new openings. Seven new own locations were opened in the first half-year alone, in key strategic cities like Barcelona, Florence and Frankfurt. These locations are complemented by ten new boutiques operated by partners – for example in the Chinese city of Zhengzhou, in Riga and Ulan Bator – as well as new shop-in-shops, among others, in Taipei, Hong Kong and Beijing.