May 9, 2017
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Spain's Cortefiel reports rising turnover ahead of potential sale

May 9, 2017

Spanish clothing retailer Cortefiel said on Tuesday sales and core earnings rose during its latest financial year as its private equity owners explore a sale of the business.


However, the retailer, whose brands include underwear chain Women'Secret and preppie label Springfield, registered a loss of 24 million euros ($26 million) in the year to the end of February after it invested on rearranging stores, closing bigger ones to focus on smaller retail spaces.

"We hoped to be in profit this year, but the consolidation process we started last August has pushed back this target to next year," said Chief Executive Officer Jaume Miquel in a briefing with reporters. He took over in August 2016.

Originally a family business founded more than 100 years ago, Cortefiel was bought in 2005 by private equity firms PAI Partners, CVC Capital and Permira, just two years before Spain's boom years of credit-fuelled high spending came to an end.

Goldman Sachs is running the sale of the company on behalf of the three funds, according to sources. Goldman Sachs and the private equity owners have all declined to comment on the matter.

CEO Miquel said on Tuesday that an investment bank had been hired in relation to a process involving the future of the company, without providing more details.

He said the aim was to find a solution to give the company financial stability and a solid shareholder ownership before March next year when 1.4 billion euros of syndicated bank debt matures.

The retailer said sales rose 3.1 percent to 1.13 billion euros in the year to Feb. 28 while earnings before interest, tax, depreciation and amortization (EBITDA) came in at 114.69 million euros, an increase of 6.7 percent.

Sales had improved as the company, which is present in 90 countries including Mexico and Russia, rowed back on a strategy to make the brand more appealing to younger shoppers and focused on the target clientele aged from 45 to 55, Miquel said.

Core profit, excluding one-offs, jumped by more than half from October to March, the company said. Summer season clothing for sale on its website include a flowing, floral blouse for 59.99 euros and a waterfall lapel blazer for 79.99 euros.

Cortefiel, where Spain accounts for just under half of core earnings, has been through a number of financial restructurings since 2005. The last was in March 2014 when the company extended debt which falls due next March.


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