German fashion house Gerry Weber has offered an optimistic outlook despite booking lower sales and moving to a loss for the full-year as its cost-saving programme failed to improve profitability.
In the six months ended 30 April, the firm posted a net loss of EUR0.8m (US$978,200), compared to net income of EUR0.5m a year earlier. Gross profit margin dropped from 60.4% in the previous year to 58.6%.
Consolidated group revenues meanwhile, declined by what the company called a “moderate” 2.2% to EUR880.9m on the back of 68 store closures in the period.
Launched in early 2016, the company’s Fit4Growth programme was aimed at making the group “even faster and more efficient”, with a “more modern and higher-quality” presentation of the Gerry Weber core brand in particular.
Completed on 31 October last year, the firm says it has resulted in cost savings of about EUR30m with regard to personnel and operating expenses. However, despite these efforts, it has been unable to improve its profitability. As a result, the managing board and the supervisory board have decided to initiate further measures aimed at achieving a sustainable improvement in profitability.
Gerry Weber says these measures will primarily be implemented in the areas of procurement, product development, and product range design; while beside this, the company will continue to implement the measures aimed at modernising its brands with “great determination”.
“The measures, whose details yet need to be defined, will result in further extraordinary effects in FY 2017/18, which will weigh on the Gerry Weber group’s EBIT,” the company said. “In addition, we will continue to invest in the digitalisation of our value chain and the optimisation of our distribution channels.”
The company’s core brands – Gerry Weber, Taifun, Samoon and Talkabout – contributed EUR686.6m in total group revenues, down from EUR717.6m last year. The group said the 4.4% decline is primarily attributable to the drop in revenues of the core retail segment, which was due to store closures in the period and a 1.9% decline in like-for-like revenue.
Meanwhile, the online activities of all brands of the Gerry Weber group showed a positive trend. While online revenues of the core brands increased by 12.9% to EUR31.5m, Hallhuber boosted its revenues by 14.2% to EUR20.1m in the past fiscal year.
CEO Ralf Weber, however, remains optimistic, hailing the group’s “strong brands”, “innovation capacity and financial strength”, and its ability to “adapt to changing requirements” as the factors that will bring it back to sustainable profitable growth.
Last week, as part of its continued efforts to return to profitability, the company appointed a new management board, tasked with developing a performance programme to drive a “sustainable increase” in profitability at the firm.