(Filed Under wholesale Lingerie News). Using words such as “shrinking,” “tough,” “tense,” “deteriorated,” “struggle” and “flat or negative development,” to describe market conditions and its efforts to overcome them, Calida Group’s 2013 annual report, promises a challenging, if not uncertain, future for that brand and Aubade (which it acquired in 2005).
Although both European brands have been prominent in underwear and lingerie for decades, the category has become so difficult for management that it reported it has been “keen to expand in areas outside the underwear segment” for some time. As a result, Calida completed by the end of 2013, a takeover over of Lafuma, a French manufacturer of sports clothing and equipment and garden furniture. This will most like reduce the lingerie portion of Calida’s business to about half.
In 2013, net income at Calida dropped to 10.6 million Swiss francs (about $11.9 million) compared to 20.6 million Swiss francs in 2012, while sales rose to 206.4 million Swiss francs (about $232.6 million), up from 203.1 million Swiss francs in 2012.
What is striking is Calida’s pessimism about the future of its under garment business along with its willingness to take on the problems of another troubled firm, in a category in which it has less experience. “The Lafuma Group incurred a total net loss of 60.1 million euros [about $82.7 million] for the first half year,” according to the Calida report. At the time Calida only owned 15.3% of Lafuma, which limited the impact on its own bottom line. At the time of the release of the annual report this year, Calida had expanded its control to about 60% of Lafuma.
A statement in the Calida report signed by Dr. Thomas Lustenberger, chairman, and Felix Sulzberger, CEO, declared “We were keen to expand in areas outside the underwear segment because the European textiles and clothing markets of relevance for the Calida Group have been contracting for a number of years now. Consumer demand is increasingly shifting away from brands and towards vertical retailers offering own-brand products. This trend is particularly pronounced in the underwear segment, which is better suited than many other products for sale alongside food and beverages. Good examples of this in Switzerland are the major supermarkets Migros and Coop, both of which carry underwear in their ranges.”
While it is fair to speculate how Calida’s significant and yet unproven foray outside of familiar territory will affect its lingerie and underwear brands — as well as what the distraction will mean for the U.S. market — the firm remained upbeat about Aubade and Calida. It stated that both brands “once again ... contributed to the good development in the reporting period: Calida grew by 2.5 percent (1.5 percent after eliminating currency effects) and generated sales of CHF 142.1 million [about $159.1 million], while Aubade enjoyed growth of 6.7 percent (4.5 percent after eliminating currency effects) and generated sales of CHF 68.9 million [$77.1 million].”
“Calida clearly outperformed what is generally a shrinking market overall and managed to secure new market shares,” the company said of its underwear brands.
Looking ahead, Calida promised “The fiscal year 2014 will be all about efforts to turn around and integrate the Lafuma Group. We expect measures already implemented at Lafuma to at least see the company break even in 2014. Our core brands Calida and Aubade have a tough year ahead of them in 2014. The economic situation has deteriorated in Aubade’s home market, France, in particular and consumer confidence is not good. Although the economies are much stronger in Switzerland and Germany, Calida’s home markets, the competitive situation is tense. Traditional wholesale accounts for around sixty percent of our distribution channels, followed by our own boutiques with around a third, and fast-growing direct sales online. Thanks to this healthy balance, both the Calida brand and the Aubade brand are firmly anchored in the market. With a strong foundation built on quality of products, attractive styling and excellent service, we are confident that the brands will return solid results once again in 2014.”
In conclusion the Calida managers warned, “Group sales are set to virtually double in the coming year now that Lafuma’s sales are also included. In terms of earnings, we expect results to fall slightly short of this year’s figures. This is because both Calida and Aubade will struggle to repeat their record-breaking 2013 figures, while the Lafuma Group is not initially expected to make a material contribution to profit. In the medium term, however, the Calida Group’s new enhanced brand portfolio offers exciting development potential, especially in international markets.”
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