(Filed Under wholesale Lingerie News). The Calida Group, the Swiss firm that owns both the Calida and Aubade underwear and intimates brands, seems to have successfully orchestrated its purchase of a controlling interest in a larger, troubled, outdoor sports apparel company, and produced a profitable first half of 2014. At the same time, the firm emphasized the serious challenges it faces in its original lingerie businesses.
Calida reported net income of 5.2 million Swiss francs (about $5.4 million at current exchange rates) on sales of $197.4 million Swiss francs in the six months ended June 30, 2014, compared to net income of 4.5 million Swiss francs (about $4.7 million) on sales of 93.7 million Swiss francs (about $97.9 million) for the same period last year.
Calida, over the past year or so, acquired a 59.9 percent majority stake in the French company, LAFUMA, which includes such brands as Millit mountain gear, Eider ski wear and Oxbow surf gear. In a letter to shareholders, chairman Dr. Thomas Lustenberger and CEO Felix Sulzberger noted that “The turnaround at the LAFUMA Group, which had been making a loss in recent years, was achieved for the most part. They added that “During the first half of the year the LAFUMA Group itself posted an operating result of EUR 1.5 million, compared with an operating loss of EUR -54.2 million [or a loss of about $68.7 million] in the equivalent period of the previous year.”
The report on Calida’s first six months included assessments of how both that brand and Aubade have been doing, a discussion of overall market conditions in Europe and elsewhere, and a significant endorsement of the company’s strategy to sell directly to consumers by opening its own stores and selling online.
The company executives reported that “During the first six months of 2014, the Calida division achieved sales of CHF 60.2 million [or about $ 62.9 million], contributing 30.5 percent of total sales at the Calida Group. The Calida brand thus grew by CHF 0.9 million, or 1.5 percent (2.3 percent after currency adjustment). Given the tough consumer environment, this is a good result. According to market research company GfK, for example, the overall fashion/style segment in the Calida brand’s largest market, Switzerland, only grew by 1.2 percent. Calida did much better than the market as a whole with 4.9 percent growth in its own stores after adjusting for changes in floorspace. This good performance was also reflected in the Calida brand’s financial result, which made the year-on year increase in the contribution to Group profits slightly larger still.” The executives added that, “The order book for the second half of the year leads us to expect another solid result for the Calida brand for 2014 as a whole.
The story was not as good at Aubade. Lustenberger and Sulzberger reported that “Following five years of uninterrupted growth, Aubade posted a slight fall in sales of EUR 1.1 million, or 4.1 percent, to EUR 26.9 million [or about $ 34.1 million] in the first half of 2014. Aubade thus accounted for 13.6 percent of Calida Group’s overall sales. The decline is not surprising given the poor consumer sentiment in France, Aubade’s main market. The fall would have been steeper if Aubade hadn’t invested consistently in recent years in its own network of boutiques. While Aubade’s sales in other shops and department stores were around 12 percent lower in the first half year, the Aubade boutiques, of which there are now more than 50, achieved floorspace-adjusted growth of 4.3 percent. The sales trend for Aubade was negative in international wholesale markets as well. Weak consumer demand meant that independent retailers in all markets found it increasingly difficult to operate at a profit. Rents, wages and other costs are rising continuously while sales and margins are declining. In France alone Aubade has lost more than half its independent retailing clients since 2005 as a result of them closing their businesses. The strategy developed by Calida Group of building up alternative distribution channels (own brand boutiques, outlets, e-commerce) has provided vital support and will continue to be a high priority in future. During the first half year, Aubade achieved 40.2 percent of its sales directly to consumers through these channels. Thanks to the excellent gross margin and solid cost management, Aubade made a significant contribution to the group’s profit for the half year despite the slight fall in sales.”
Looking ahead, the executives declared that “Despite the subdued prospects for the economy as a whole, we are confident about the second half of 2014. All divisions have a solid backlog of orders.”
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