(Filed Under Financial and General Interest News). Wolford Group reported sharply higher losses of 3.2 million euros ($4.1 million) for its first quarter (May 1, 2012 to July 31, 2012) on rising sales of 33.1 million euros ($42.4 million), compared to a loss for the same period last year of 1.8 million euros ($2.3 million) on sales of 31.8 million euros ($40.7 million). The company is publicly listed on the Vienna Stock Exchange.
Wolford’s management report notes that “Wolford’s first-quarter earnings indicators were always negative up until now due to the traditionally disproportionally high costs in relation to sales, which in turn is related to the seasonality of first-quarter business development. The opening of new boutiques in the second half of the 2011/12 fiscal year featuring correspondingly necessary start-up periods intensified this effect in the first quarter of 2012/13.” Indeed, in the past six years, Wolford has always lost money in its first quarter; however this year’s first quarter loss is the second highest of any in the past six years.
In the past two years, Wolford has earned a profit for the full year (1.36 million euros or $1.74 million, on sales of 154.1 million euros, or $197.4 million, for the year ended April 30, 2012, compared to a profit of 5.1 million euros, or $6.5 million, on sales of 152.2 million euros, or $195 million, the previous year).
Speaking of the first quarter sales, the company stated that “From a regional perspective, a positive picture generally emerged from Wolford’s core geographic markets. The good sales development could be continued compared to the prior-year period, with the USA, France, Belgium and UK showing a particularly dynamic development characterized by significant growth in the double-digit percentage range.
Interestingly, Wolford seems to do best in environments where it is the only brand available. The company stated, “As in previous quarters, Wolford’s proprietary stores also showed a particularly good development in the reporting period. Accordingly, the Wolford Group achieved a sales increase of 13.3 percent with its own boutiques, shop-in-shops, factory outlets and e-commerce. Thus the share of total sales generated by retail in the first quarter of 2012/13 climbed to 54.7 percent (Q1 2011/12: 50.9 percent). This rise was partly due to the expansion of Wolford’s own distribution network. However, the Wolford Group also achieved a gratifying sales growth of 7.4 percent with its own points of sale on a like-for-like basis. The online business also made an important contribution to this strong rise in sales, generating a significant sales increase compared to the prior-year period. On balance, Wolford-controlled distribution channels i.e. those points of sale which exclusively offer Wolford products (own and partner-operated boutiques, factory outlets, concession shop-in-shops and e-commerce) accounted for 66.6 percent of total sales in the first quarter of 2012/13 (Q1 2011/12: 62.4 percent). In the first quarter of 2012/13 the wholesale business developed satisfactorily, particularly with partner boutiques and department stores. Multi-brand retailers comprised the only distribution channel where sales fell compared to the prior-year period.”
Looking ahead, Wolford declared, “In the future Wolford will continue to expand its global monobrand distribution network, both via its own as well as partner-operated points of sale, in order to further strengthen the international presence of the Wolford brand. In this regard, the Wolford Group will not only concentrate on its core markets in Europe and Northern America but increasingly on the Greater China region. From today’s perspective the Executive Board of the Wolford Group expects to generate further growth in the 2012/13 fiscal year.
As of April 30, 2012 the company reported 265 “monobrand points of sale.” Of those it defines as its “own points of sale” 118 boutiques, 32 concession shop-in-shops and 25 factory outlets. In addition it lists in the category of “partner-operated points of sale” 90 boutiques “and about 3,000 other distribution partners.” In all it claims “points of sale in about 65 countries.”
According to its most recent annual report, “Wolford will continually expand the number of monobrand stores in the future as well. The international network of boutiques – either owned by Wolford or partner-operated – was by far the most important distribution channel, accounting for 49.0 percent and thus the highest share of total Group sales in the 2011/12 fiscal year. Of the 208 boutiques as of the end of April 2012, 118 were owned and managed by Wolford, whereas 90 of these stores were operated by partners. Numerous fashion and specialized retailers which carry exclusive brands also offer Wolford creations in their portfolio. These multi-brand retailers are specifically chosen and trained in order to ensure a suitable presence of the products and competent consulting for customers. Sales generated via multi-brand retailers comprised 18.4 percent of Group sales during the period under review.”
“Wolford products are offered in department stores such as Harrods in London and Bergdorf Goodman in New York in exclusive shop-in-shops featuring the appealing Wolford ambience. In its concession shop-in-shops i.e. areas in department stores operated by Wolford, the company focuses on an open presentation of its Ready-to-wear and Lingerie portfolio in addition to Legwear as a means of highlighting the products. The distribution channel of department stores including concession shop-in-shops generated 21.0 percent of total sales in the 2011/12 fiscal year. During the reporting period factory outlets accounted for 9.5 percent of total Group sales. The online business has gained in importance for Wolford as a complement to traditional distribution channels in order to increasingly market its product portfolio also to younger target groups and consumers outside of urban centers. At present consumers in 14 countries can order their favorite creations around the clock in Wolford’s own online boutiques, for example in Austria, Germany, Netherlands, Great Britain, Spain, France and the USA.”
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