Wolford still in the red but predicts future profits after stabilisation year
Jul 23, 2019
Wolford’s annual results showed an improvement on Tuesday, although the high-end hosiery and bodywear company isn't in the clear just yet. It reduced its losses “slightly” in the year to the end of April, despite higher investment and lower revenue, and also said that it has created “the basis for future growth.”
And that will include new product lines such as athleisure that’s due this autumn. Importantly too, it’s also now targeting the key Chinese market and benefiting from its revamped image.
The company, which is listed on the Vienna Stock Exchange, said its revenues fell 8% to €137.22 million, and that it shared the same problems seen by many store-based retailers, “suffering from the effects of far-reaching structural change and a slowdown in growth in West European fashion markets.”
But the company also said that “thanks to the sustainable impact of its existing restructuring program,” it “fully made up for the €11.85 million reduction in its revenues.”
The operating loss (EBIT) showed a slight improvement, narrowing from €9.22 million in the previous year to €8.98 million this time. And the net loss also narrowed to €11.1 million from €11.53 million.
The success of its restructuring program was “reflected above all in the company’s personnel expenses,” which fell by almost €15 million to just over €60 million.
The company said its balance sheet is in a much better position than it was a year ago following its successful capital increase and that its course is set for “profitable growth”. It added that the financial year just ended was seen as “an opportunity to lay major foundations to stabilise its revenues.”
This was helped by the creative work it has been doing. Since August 2018, the company has implemented a new window display concept across Europe and introduced a completely new visual imagery scheme aiming at younger target groups in particular.
The new store concept was presented in Amsterdam and Paris earlier this year and is due to be rolled out at other locations in the near future, starting with three stores in Asia.
Wolford said it’s also “creating new momentum with its collection.” As mentioned, in September, it will be launching ATH_W, its first sports-inspired athleisure collection, onto the market, which it said “has already met with a positive reception from specialist audiences.”
And it has also optimised its sales organisation “to enable sales activities to be managed by an extended sales team based in Milan.”
And that Chinese expansion? In the latest year, the company entered a new deal with FFBM (Fosun Fashion Brand Management) to spearhead its growth in China and with Chinese customers set to account for almost half of global luxury goods consumption within a few years, it has high hopes.
In the medium term though, the share of revenues Wolford generates in China should be comparable with that in its existing core markets of the US and Germany, which currently account for 20% and 15% of revenues respectively, it said.
Will this feed through into profits at some point? Yes, but not yet. The company is only expecting to generate positive operating earnings again in the 2020/21 financial year, it said on Tuesday.
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