European fashion retailer Charles Vögele Group has decided to write off all CHF74m (US$59.51m) of the company's Netherlands sales organisation's goodwill, meaning a 2006 loss for the group.

The goodwill stems from the acquisition of the Dutch Kien Group by Charles Vögele in 2001. The board has decided to take action because its 2006 target of breaking even at the EBITDA level in the Netherlands was not achieved despite ongoing improvements, it said.

Vögele said it is still committed to The Netherlands and intends to grow organically in this market in the years to come.

Overall, the group generated net sales of CHF1.32bn in 2006, a decline of about 1.8% on 2005. Gross profit for the period came to CHF818m. The group's net profit for 2006 before write off was CHF55m, compared to CHF70m in the previous year. After allowing for the goodwill write off, it leaves a group loss of about CHF20m.

After the write off the group will still have a solid equity capital ratio of 55%. This one-time write off will not have a negative impact on the group's future development and its ongoing earnings power, Vögele said.

"By clearing the balance sheet we do not impact the solid financial base of the group," said the CEO of Charles Vögele Group, Daniel Reinhard. "We will now concentrate on our expansion in the existing and the new markets and on further improving profitability in our sales organisations."

The company said its operating earnings (EBITDA) were CHF90m for the second half of 2006, slightly below the best semester result of the last five years. In the second half of 2006, the group increased its sales by 2% year-on-year. The generated operating earnings before depreciation (EBITDA) of approximately CHF90m are only slightly lower than the best semester result achieved in the last five years.

In its 2007 financial year outlook, Vögele said it would concentrate on increasing the pace of growth and on the sustainable improvement of operating results at all sales organisations. Its forecast for 2005-2007 with regard to the EBITDA margin remains unchanged, and the company expects sales to develop in line with, or slightly better than, the general market.