• Q2 profit of EUR6.6m
  • Gross margin widens to 59.7%
  • Net sales drop 2.2% to EUR227.4m (US$266.7m)
Tom Tailor has returned to profit in its second-quarter

Tom Tailor has returned to profit in its second-quarter

Tom Tailor saw its share price climb nearly 15% in morning trading as the German fashion group revealed a return to a profit in its second-quarter thanks to "considerable progress" with its ongoing realignment strategy focusing on cost and process optimisation.

Despite a slight drop in sales of 2.2% to EUR227.4m (US$266.7m) in the quarter, earnings reached EUR6.6m from a loss of EUR1.9m a year earlier. Gross margin widened to 59.7% from 59.1%.

Tom Tailor put the growth down to the success of its transformation plan, which has been working 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.

In its second quarter, growth was achieved across all channels except the Bonita brand, where sales fell 14.7% to EUR73.1m. The highest sales growth was achieved in wholesale where revenues climbed 8.3% to EUR78.8m. Retail sales were up 2% to EUR75.4m.

"We are making good progress towards our goal of putting the Tom Tailor Group back on a solid foundation," said CEO Dr Heiko Schäfer. "Especially in the second quarter we made a great leap forward. Our results show without a doubt that our realignment measures are taking hold. Consequently, along with the well advanced Reset programme, our focus is now also on the preparation and implementation of growth measures such as the expansion of our online business."

Thanks to the results of the Reset programme so far, Tom Tailor has reaffirmed its full-year forecast of a sharp year-on-year increase in reported EBITDA. A slight decline is expected in group sales.

"Although 2017 is a transformation year, the increasingly visible successes of our restructuring measures leave us feeling confident as we look ahead to the second half of the year," added CFO Thomas Dressendörfer.