(Filed Under Financial and General Interest News). Van de Velde profits dropped significantly for 2012, to €25.6 million on slightly higher sales of €181.8 million, compared to a profit of €41.2 million on sales of €179.8 million in 2011. The Belgian intimate apparel firm owns such brands as Marie Jo, Andrés Sardá and Prima Donna and operates retail stores under various names in different parts of the world, including Intimacy in the U.S.
In a sign that its 2008 acquisition of Spanish brand Andrés Sardá was not working out quite as well as expected, the company took an €8 million charge which it described as an “impairment of goodwill and intangible assets with indefinite useful life” related to the division. “As reported earlier, the Andrés Sardá brand is suffering from the financial crisis in southern Europe, given that Spain is Andrés Sardá’s home market,” the firm explained. “Van de Velde continues to invest in this brand’s long-term future, for which additional marketing investments will be made in 2013. The low point of 2010 is clearly behind us and all turnover figures since then have been higher than this low point. Andrés Sardá remains one of our three core brands, alongside Marie Jo/L’Aventure and PrimaDonna/Twist, and will be given the support it needs to achieve this ambition. However, the development of turnover and the EBITDA contribution in 2012 and 2013 continue to be below expectations as set at the time of acquisition and as a consequence expectations have been adjusted. This results in a partial impairment of €8.0 million of goodwill (€2.5 million) and intangible assets with indefinite useful life (€5.5 million) in connection with Andrés Sardá. This impairment is purely an accounting measure representing a non-cash charge and accordingly has no impact on 2012 cash flow or future cash flows. Furthermore, this impairment does not affect the long-term ambition of this brand in any way.”
In explaining the weak increase in sales, Van de Velde noted the firm’s wholesale turnover declined by 1% for the year, adding that “This fall is mainly due to a decline in the first half of 2012; wholesale turnover increased by slightly more than 1.0% in the second half.”
The company raised yet again its figure for the decline in sales at Intimacy, listing it now as “12.6% in local currency and 5.3% in euro.” Earlier this year the firm said it expected “a fall in the retail turnover of Intimacy of about 12% in local currency and 5% in euro.” Last year when it reported results for the first half of 2012 it described a less severe decline at the retailer for the first six months, noting “A fall in retail turnover at Intimacy by around 10% in local currency and 1.5% in euro.” The company emphasized that “Turning around Intimacy is particularly important. Cost optimizations have been implemented and all efforts will be on the market in the course of 2013.”
On the positive side, Van de Velde noted that overall sales were helped “in continental Europe” by the “retail turnover of Rigby & Peller (formerly Oreia) [which] rose by 7.0%, due to the opening of new stores in Germany and Spain” and “The contribution of retail turnover of Rigby & Peller in the UK [which] was £9.2m (€11.3 million) versus €4.4 million in 2011 (5 months).”
Van de Velde also listed other factors in its results including “a slight fall in the gross margin due to rising stitching costs in China and higher stock depreciations (primarily raw materials).”
The full annual report from Van de Velde is expected before the end of this month.
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