Tom Tailor had been working on a transformation plan

Tom Tailor had been working on a transformation plan

German fashion group Tom Tailor Holding has said it expects its realignment plan to have a positive impact this year, but admitted it still has "quite a way to go" as it revealed a net loss for fiscal 2016.

For the 2017 fiscal year, the company is expecting a slight year-on-year rise in group sales, primarily thanks to the Tom Tailor brand, and a "sharp" rise in reported EBITDA. Given that the non-recurrent and mostly non-cash expenses resulting from the firm's 'Reset' programme were mainly absorbed in 2016, the company said it expects the positive effects of the realignment to become clearly visible over the course of this year.

Tom Tailor has been working on a transformation plan to reduce costs, increase efficiency and expand the range of products and services offered through e-commerce in order to get the group back on track for profitable growth.

"After setting a new course in 2016, we are now fully concentrating on our healthy core business," says CEO Dr Heiko Schäfer. "With our reconstituted executive team we have launched important initiatives to improve efficiency and earning power. Tom Tailor Group is already an entirely different company than it was a year ago. The initial successes demonstrate we are on the right track. At the same time we are aware that we still have quite a way to go. We have to continue to set a strong pace in the transitional year 2017."

In fiscal 2016 the company increased group sales by 1.3% to EUR968.5m (US$1.05bn) from EUR955.9m. Group EBITDA amounted to EUR10.3m, a drop from EUR67.6m in the year ago period. Due to Reset, gross profit margin at 54.5% was slightly lower than the previous year's level, while net losses amounted to EUR73m from a profit of EUR0.1m in 2015.

Tom Tailor says the resources released by the Reset programme will be used in 2017 to update brand profiles and push ahead with the group's digitalisation campaign. With "trend-setting e-commerce activities, a future-ready omni-channel platform and high-demand shop locations", the company adds it is planning to continue improving its position in core markets and establish a solid foundation for future profitable growth.

Reported EBITDA is expected to improve significantly, while in 2018 the company expects an EBITDA margin of more than 10%.