Gerry Weber predicts another turbulent year, will boost product offer

By

Sandra Halliday

Published
Feb 27, 2018

Gerry Weber may be a couple of years into its turnaround programme but profits growth remains elusive for the German womenswear giant that is a popular name across Europe and the UK.

The company is investing heavily in modernising its brands via its Fit4Growth strategy and while it has seen major cost savings, that investment remains a drain on the bottom line.

What that meant in its latest financial year (the 12 months to October 31) was a consolidated net loss of €0.8 million compared to a profit of €0.5 million a year earlier. Its consolidated profits on an Ebitda basis dropped almost 25% to €58.2 million as the ebitda margin fell to 6.6% from 8.6%. And of course, that was also a reflection of falling revenues, which dipped 2.2% to almost €881 million after it closed more stores.

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But when will we see an improvement? The company didn’t give us a timeline on Tuesday but did say it would initiate “further measures” around procurement, product development and design.

The downside to that is that earnings will continue to be under pressure. For the 2017/18 financial year, further one-off costs and investment cash that is being pumped into developing its digital ops will hurt its results. Its revenues should be “almost stable” at €870 million to €890 million but consolidated profit on an Ebit basis will be only €10 million to €20 million, a wide range that presumably reflects the uncertainty surrounding the company and the wider market at the moment.

CEO Ralf Weber is staying upbeat though and said: “Thanks to our strong brands, the company’s innovation capacity and financial strength and its ability to adapt to changing requirements, we will lead Gerry Weber back to sustainable profitable growth and vigorously implement all measures that are necessary to achieve this goal.”