Struggling German fashion retailer Gerry Weber has announced it will close 230 stores and cut its workforce, warning it expects a “significant loss” in earnings for the full year fuelled by restructuring costs, depreciation and write-downs.
The news comes as the company issued its preliminary results for the period ending 31 October, which anticipates an operating loss (EBIT) of EUR15.5m (US$17.7m) compared with EBIT of EUR19.9m last year.
The earnings are impacted by non-cash provisions for restructuring measures and consulting costs of EUR63.3m, as well as extraordinary depreciation and write-downs of EUR69.3m, resulting in a loss of EUR148.1m compared with a profit last year of EUR10.3m.
Sales fell 10% to EUR795m.
“We cannot be satisfied with the developments of the past financial year. This, however, comes not as a surprise,” asserts Johannes Ehling, spokesman of the executive board who was appointed in October following the exit of CEO Ralf Weber.
“Now, however, we clearly focus our attention and efforts on the future, vigorously implementing our future concept to reposition Gerry Weber in the market.”
The group has confirmed it will close 230 retail spaces and start reducing its workforce nationally and internationally. Jobs will be cut in stores and retail spaces as well as in centralised functions.
“According to the preliminary results, our annual financial statement for the past financial year will be shaped by major structural and balance sheet adjustments. With these adjustments, we gain the necessary flexibility and lay a sustainable foundation for regaining the company’s former strength,” says Florian Frank, chief restructuring officer (CRO), who was appointed in October amid declining sales.
“Precondition to this is the conclusion of a sustainable financing concept by the end of January 2019. In light of the constructive ongoing discussions with all debt and major equity holders we are confident in our ability to successfully conclude the financing concept,” he adds.
The group has rolled out a number of measures to reposition it for growth following a series of sales falls.
Last month it initiated a new performance programme to focus on digitisation and build a leaner businesses structure – a move that resulted in up to 150 job cuts – following a third-quarter sales fall of 7.3% to EUR575.1m (US$658.7m). It attributed the decline to “continuous structural weakness in the German and European trade in textiles, the exceedingly hot summer, ripple effects from store closures in context of the concluded the Fit4Growth programme, as well as planned adjustments of the business model as part of the performance programme announced in June.”
The Fit4Growth programme was implemented in 2016 and aimed at making the company “even faster and more efficient,” with a “more modern and higher-quality” presentation of the Gerry Weber core brand in particular.