Wolford Q1 profits increase despite marginal decline in revenues

REPORT_ Wolford reported profitability in the first quarter of the 2014/15 financial

year from May to July 2014. Revenues declined slightly by 1.1 percent, or 0.37 million euros (0.47 million dollars), to 31.91 million euros (41.21 million dollars), but the development of earnings was sound. The company also recorded positive net profit of 1.49 million euros (1.92 million dollars) for the first time in the seasonally weak three-month period from May to July.

EBIT improved from below 5.18 million euros (6.69 million dollars) to over 3.02 million euros (3.90 million dollars) and EBIT, adjusted for non-recurring income and expenses, improved from below 5.18 million euros (6.69 million dollars) to below 0.17 million euros (0.21 million dollars).

The slight decline in revenues resulted primarily from the closing of unprofitable locations and the expected reserved market acceptance of the Spring/Summer 2014 trend collection. The substantial earnings improvement resulted from the steady implementation of optimization measures and special effects. Wolford’s primary goal for the 2014/15 financial year is to complete the operating turnaround with positive EBIT. “Wolford‘s growth must be sustainably profitable. Our refocusing measures are based on this objective and, as our first quarter results show, we are making good progress,” explained Axel Dreher, Speaker of the Wolford Management Board.

Wolford’s retail business continued its positive development with a year-on-year increase of 1 percent in revenues Online business recorded revenue growth of 29 percent, however, wholesale revenues were 4 percent lower. A regional analysis of first quarter revenues shows different developments that were influenced by the closing of points of sale. Wolford recorded lower revenues in the USA, Austria, Switzerland, Belgium and Central and Eastern Europe, and slight growth in Germany and the Netherlands. Great Britain and Scandinavia reported overall revenue declines, but Wolford’s own retail business grew on a like-for-like basis also in these countries. Revenues were stable in France, and growth was strong in Italy and Spain. In the growth market of Asia the company saw a further double-digit increase in revenues, due to the opening of new locations and the expansion of the partner business.

Wolford will continue to establish company-owned boutiques in key strategic cities and top locations, as is illustrated by the recent openings in Barcelona und New York. The company is also strengthening the integration of individual sales channels in order to utilize the momentum and growth potential of the online business. Based on the measures initiated and implemented to date, the Management Board of Wolford AG has defined the operating turnaround as the primary goal for 2014/15. Substantial progress was made in generating positive EBIT during the past months.