(Filed Under Financial and General Interest News). The Intimacy chain of lingerie shops in the U.S. continue to be a drag on the otherwise positive results for Belgian parent company Van de Velde. In reporting its company-wide 2014 results it acknowledged “A fall in retail turnover at Intimacy by 16.7% (12.0% on a like-for-like basis) in local currency.”
Van de Velde added that “The turnaround at Intimacy remained elusive in the second half of 2014. Any additional impact on the carrying value of the intangible assets with regard to Intimacy (after the impairment at half-year) will be examined during the year-end closing.” In reporting its results for the first half of 2014, the company said that an “impairment test” of the value of the Intimacy chain indicated a significant decrease since it began to acquire the retailer, in stages, in 2007.
The lingerie conglomerate stated in the current report that it “acquired the remaining 15% of Intimacy shares from the Nethero family in early 2015 and now has a 100% shareholding in Intimacy.”
Meanwhile the firm, which owns the PrimaDonna, Marie Jo and Andres Sarda brands, as well as lingerie retail chains across Europe, reported an overall 7.2% gain in “annual” sales during the year, and a “consolidated turnover” rise of “8.8% in 2014 (from €182.4m to €198.5m).”
The company added that “On a like-for-like basis (including comparable deliveries) consolidated turnover is up 7.2%,” based in part on a “9.7% growth in wholesale turnover. This growth is driven by the very successful launch of PrimaDonna Swim and the strong growth in lingerie.”
Despite the decline at Intimacy, Van de Velde reported that “In continental Europe retail turnover rose by 20.6%, especially due to strong like-for-like growth in Germany (14.8%) and the Netherlands (14.1%). Furthermore, the one-time Donker stores are included over 12 months in 2014 versus 9 months in 2013.” In addition, “Retail turnover at Rigby & Peller in the United Kingdom rose by 6.9% (1.8% on a like-for-like basis) in local currency. The strengthening of the UK pound against the euro means the rise in euros is higher.”
Complete fiscal results for 2014 will be announced on February 24, 2015 the company stated.
Last September, in reporting its results for the first half of 2014, Van de Velde had made special note of the accounting losses it expects from “IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE” that it is recording because of the declines at Intimacy. “As previously announced, the profitability of Intimacy suffered from a further turnover decrease. In 2013 Intimacy’s consolidated EBITDA (including the margin on Van de Velde brands sold through Intimacy) was slightly positive, but this was no longer the case in the first half of 2014. The targets set for 2014 were not achieved and Intimacy’s performance also fell short of the targets set when the majority stake was acquired in 2010. The targets set when the majority stake was acquired were the basis for the valuation of goodwill and other intangible assets in accordance with IFRS [International Financial Reporting Standards] in 2010. The valuation was US$ 42.8m or € 31.4m for 100% of the shares. An interim impairment test was conducted in response to a number of impairment indicators (including the non-achievement of the 2014 targets). This test indicates an impairment of US$ 22.1m or € 16.3m. A revised version of the business plan with lower turnover and EBITDA forecasts was used as a basis for the impairment test. A new evaluation of the business plan will be done on a regular basis. This impairment is purely an accounting measure representing a non-cash charge.”
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