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Wolford Aktiengesellschaft

EANS-News: Wolford AG: Cost Savings Partially Compensate for Revenue Decline

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  Corporate news transmitted by euro adhoc with the aim of a Europe-wide
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Quarterly Report

Bregenz -

* Revenue down 9%
* New restructuring program launched with more than EUR 10 million saving
  potential identified
* Market drive initiated for China
* Plan to return to profitability no later than in the 2020/21 financial year

  Bregenz, March 15, 2019: Wolford AG, which is listed on the Vienna Stock
  Exchange, generated revenue of EUR 108.2 million in the first nine months of
  the current financial year, comprising a decline of 9.4% when compared to the
  same period in prior year (EUR 119.4 million). The decrease in revenue equaled
  9.0% when adjusted for changes in currency exchange rates. A large share of
  the revenue decrease amounting to EUR 11.2 million could be compensated on the
  earnings level thanks to the Company's initial success in substantially
  reducing ongoing costs. As a result, operating earnings only deteriorated by
  close to EUR 1 million from the same period in prior year. EBIT in the first
  nine months of 2018/19 financial year amounted to EUR -2.3 million, compared
  to EUR -1.4 million of the same period in prior year. However, as the
  consequence of tax payments in arrears, earnings after tax totaled EUR -4,2
  million for the first nine months of 2018/19 financial year, down from EUR -
  2.6 million of the same period in prior year.

  The revenue decline was a result of the Company's own retail (-7.8%) and
  wholesale (-11.4%) business, and the online segment which reported a 10.2%
  rise in revenue. Similar to physical stores of other fashion retailers,
  Wolford is suffering from the ongoing global phenomenon of declining customer
  frequencies. Moreover, Christmas sales were considerably below prior year
  level. German fashion retailers together reported a 4% drop in revenue
  according to Textilwirtschaft.

  Declining fixed costs through optimization effort / Higher marketing expenses
  to invest for future growth

  The restructuring program carried out to date including streamlining of
  corporate processes has clearly had a positive impact. Staff costs in the
  first nine months of 2018/19 financial year showed a sustainable year-on-year
  decrease of EUR 4.6 million to EUR 46.6 million. The average number of
  employees (full-time equivalents) in the first nine months of 2018/19 finance
  year was reduced by 102 people to 1,354. Other operating expenses also fell
  substantially by EUR 2.6 million to EUR 39.5 million. In contrast, the cash
  flow from investing activities rose to EUR -6.8 million in the reporting
  period from EUR -0.8 million of the same period in prior year. In the first
  nine months of 2018/19 financial year, Wolford made substantial investments in
  its new brand identity and achieved important milestones in this regard. In
  August 2018 the company rolled out its new display window concept, introduced
  its new imagery at the end of last year and opened up a pilot store in
  Amsterdam at the beginning of 2019, featuring a completely new shop concept.
  The new brand identity is designed to make the brand attractive, above all for
  younger consumers.

  The equity ratio rose from 33% to 41% thanks to the successful capital
  increase carried out in July 2018. As a result of a repayment of outstanding
  bank loans, net debt was reduced from EUR 29.0 million as at January 31, 2019
  to EUR 20.2 million as at the same period in the prior year.

  Restructuring program will be continued

  The Management Board has launched a new restructuring program in light of the
  fact that the previous cost savings have been insufficient to fully compensate
  for the revenue decline. For example, production capacities were already
  reduced in January 2019. "We have always emphasized that our restructuring is
  an ongoing process, and that internal structures have to reflect the current
  revenue level", states Brigitte Kurz, Chief Financial Officer of Wolford AG.

  The Management Board has identified considerable cost-savings potential in its
  procurement process, amongst other areas. All activities including the
  purchasing of external services will be bundled under a centralized purchasing
  management. On the balance, the identified savings potential of all planned
  restructuring activities clearly measure up to over EUR 10 million from now
  until 2020/21 financial year.

  Market drive in China

  At the same time, the Company continues to work on growing revenue. This not
  only encompasses its new brand appearance. For example, Wolford recently
  presented details on the planned market drive in China. Starting on February
  1, 2019, Fosun Fashion Brand Management Company (FFBM) as Wolford's new
  partner in China fully support the company to manage its local brand
  appearance. FFBM is a full-service provider focusing on marketing and sales of
  luxury brands in China. The experienced team of FFBM has extensive contacts
  and will ensure the cultural "fit" of Wolford's presence in this future market
  featuring a steadily growing number of luxury-oriented consumers.

  "We are intensively working on laying the foundation for renewed growth,
  precisely where future growth is expected", says Wolford CEO Axel Dreher.
  However, medium-term revenue generated in China should be comparable with
  Wolford's present core markets of the USA (20% share of revenue) and Germany
  (15%).

  Outlook

  The Management Board anticipates a loss in the current financial year in spite
  of the positive cost-optimization effects generated by the restructuring
  programme implemented to date. Against the background of ongoing market
  weakness, the Management Board also announced the initiation of further
  comprehensive restructuring measures at the end of February 2019 in order to
  bring the cost structure in line with current revenue level. The identified
  savings potential clearly exceeds EUR 10 million. With this in mind, the
  Management Board plans for the company to return to profitability (positive
  operating earnings) no later than in 2020/21 financial year.

  The report for the first nine-months of 2018/19 financial year can be
  downloaded under company.wolford.com [http://company.wolford.com/], Investor
  Relations.
  https://bit.ly/2F4WQ9Z [https://bit.ly/2F4WQ9Z]



Earnings                  05/18 -01/19  05/17 -01/18     Chg. in %       2017/18
Data
Revenues     in EUR mill.       108.15        119.36            -9        149.07
EBIT         in EUR mill.        -2.31         -1.36           -70         -9.22
Earnings     in EUR mill.        -3.30         -2.97           -11        -11.43
before tax
Earnings     in EUR mill.        -4.22         -2.57           -64        -11.54
after tax
Capital      in EUR mill.         6.79          1.17          >100          1.40
expenditure
Free cash    in EUR mill.       -11.61          2.43          <100          1.83
flow
Employees             FTE        1,354         1,456            -7         1,433
(on average)


Balance                     31.01.2019    31.01.2018     Chg. in %    30.04.2018
Sheet Data
Equity       in EUR mill.        51.38         42.90           +20         33.90
Net debt     in EUR mill.        20.19         28.97           -30         30.09
Working      in EUR mill.        37.55         42.78           -12         34.59
capital
Balance      in EUR mill.       125.75        128.97            -3        114.33
sheet total
Equity ratio         in %           41            33           +24            30
Gearing              in %           39            68           -42            89


Stock Exchange              05/18 -01/19 05/17 -01/18    Chg. in %       2017/18
Data
Earnings per         in EUR        -0.64        -0.52          -23         -2.35
share
Share price          in EUR        13.40        21.71          -38         19.75
high
Share price          in EUR        10.90        10.03           +9         11.36
low
Share price at       in EUR        11.00        13.90          -21         13.60
end of period
Shares
outstanding        in 1,000        6,631        4,912          +35         4,912
(weighted)
Market
capitalization in EUR mill.        72.94        69.50           +5         68.00
(ultimo)





Further inquiry note:
Wolford AG
Maresa Hoffmann
Investor Relations & Corporate Communications
Tel.: +43 5574 690 1258 
investor@wolford.com | company.wolford.com

end of announcement                         euro adhoc
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issuer:       Wolford Aktiengesellschaft
              Wolfordstrasse 1
              A-6900 Bregenz
phone:        +43(0) 5574 690-1258
FAX:          +43(0) 5574 690-1410
mail:          investor@wolford.com
WWW:          http://company.wolford.com
ISIN:         AT0000834007
indexes:      ATX GP
stockmarkets: Frankfurt, New York, Wien
language:     English

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