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Tom Tailor woes continue as wholesale and retail sales weaken

Translated by
Barbara Santamaria
Published
today Nov 6, 2019
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Tom Tailor has confirmed its preliminary figures for the 2018 financial year, released on October 9, and revealed a sharp decline across its retail and wholesale operations. The Bonita subsidiary suffered the steepest sales decline.

TOM TAILOR GROUP


Excluding adjustments, revenue was down 5.5% on the previous year when it posted revenue of €654.2 million. In contrast, gross profit margin improved from 53.7% to 56.6%. Ebitda reached €64 million, slightly below last year’s Ebitda level of €67.5 million. Net debt totalled €139.3 million, compared to €113.3 million a year earlier.

This was attributed to a significant increase in provisions for anticipated losses of €5.2 million for loss-making stores as well as higher marketing expenses, especially in the area of e-commerce. Ebitda margin remained stable at 10.4%, compared to 10.3% a year earlier.

The retail segment experienced a 6.9% decrease in sales to €283.0 million, down from €304 million, as a store closure programme and weaker demand softened footfall across the portfolio. New stores were not able to offset the decline, Tom Tailor said.

Revenues also fell in the wholesale segment, down by 4.3% to €335.1 million from €350.1 million in 2017. This was partly due to several measures implemented under a turnaround plan, including the closure of regional sales activities and the discontinuation of a number of product lines.

Meanwhile, the company’s e-commerce segment suffered a drop in sales due to technical issues, with online sales falling from €48.7 million in 2017 to €46.3 million last year.

The biggest drop in sales, however, was reported by the Bonita brand, which continues to be a headache for Tom Tailor. Overall, Bonita sales fell 15.7% to €225.7 million while gross profit margin was down by 7.6 basis points to 62.1%. Additionally, the brand posted an Ebitda loss of €38.2 million, compared to an Ebitda profit of €15.6 million in 2017.

As a result, the group’s board of directors has intensified the restructuring of the Bonita business and will continue to assess all options for the brand, including a potential sale. Earlier this year, Tom Tailor had agreed a deal with Dutch firm Victory & Dreams but it failed to get approval from its lenders.

"2018 was a difficult year for the entire fashion industry and after a turbulent 2019 for the company the aim now is to carefully evaluate the situation and determine the right way forward. I look forward to my new role,” said Gernot Lenz, who joined the German clothing brand as its new CEO on November 1.

The group will continue to refine its growth strategy under the leadership of Lenz, placing particular emphasis on driving growth in its core markets and emerging regions (especially in Eastern Europe, Russia and Spain), expanding the women’s category and widening the online reach.

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