(Filed Under Financial and General Interest News). Sales and earnings dropped at Switzerland-based Calida Holding AG, parent to both the Calida and Aubade underwear brands (as well as other apparel, sports equipment, surf wear and garden furniture lines).
In its annual report the company blamed “The Swiss National Bank’s decision on 15 January 2015 to stop defending the CHF 1.20 exchange rate against the euro,” as well as currency exchange rates with the U.S. dollar and terror attacks in Paris, among other factors, for the declines.
In 2015 Calida earned CHF 16.989 million (about $17.4 million at current exchange rates) on sales of CHF 358.979 million (about $368.1 million) compared to CHF 23.632 million (about $24.2 million) on sales of CHF 412.381 million (about $423.0) million in 2014.
U.S. sales for all divisions of the company were just CHF 6.779 million (about $6.95 million) in 2015, and CHF 6.728 million (about $ 6.90 million) in 2014
In a jointly signed letter at the start of the report, board chairman Dr. Thomas Lustenberger and former CEO Felix Sulzberger (who has since been replaced by Reiner Pichler), discussed the annual results and market conditions for the company’s various divisions. “Since the Calida Group generates three-quarters of its net sales in the Eurozone, an appreciation of the Swiss franc of more than 12 percent meant a nominal reduction in net sales of more than 10 percent, which obviously affected income,” the pair wrote. “The US dollar’s rise in value against the euro of more than 16 percent made production and sourcing in the dollar area more expensive.”
The executives also reported, “The Swiss market, which accounts for 17 percent of Calida Group’s net sales suffered during the year under review from “shopping tourism”. Many Swiss consumers, particularly those living in border regions, made the most of the lower euro exchange rate by doing their shopping across the border. Throughout the Eurozone, 2015 was marked by generally weak consumption. Consumers were made cautious mainly by the uncertainties caused by political, economic and social events. The most significant of these were: The terrorist attacks in January and November in Paris, which had a substantial impact particularly in France, the Calida Group’s most important sales market; The debt crisis in Greece in the first half of 2015; The refugee situation, which affected consumer sentiment in most European markets; The shift in consumption from stationary retail towards online shopping led to strong growth in direct and indirect sales through e-commerce sales channels. This growth resulted in quite stagnant, or even declining net sales through stationary sales channels. Calida Group’s divisions were affected differently by these events.”
For the company’s Calida lingerie and underwear brand, the challenging environment led to projects aimed at “strengthening the brand at key accounts in the Swiss home market, optimizing the brand’s store network, which now covers 130 Calida stores, continuing to develop e-commerce, and the ongoing modernization and optimization of the collections.”
Meanwhile, the Aubade brand, which was purchased by Calida some years ago, “was practically unaffected by the currency turbulence because more than 90 percent of sales, cost structures and production/sourcing are in the Eurozone. However, with two-thirds of its sales in France, Aubade did suffer as a result of the weak consumer activity in its home market. After a rather weak first half-year, when net sales slipped by 2.0 percent, Aubade had a much stronger second half. The decline in annual net sales was thus reduced to 1.0 percent; at EUR 14.4 million the contribution to operating profit only fell slightly from the prior year’s 27.6 percent to 26.9 percent. Aubade thus remains very profitable. Since the turnaround in 2009 the brand has regularly increased its net sales and profitability. However, this positive trend is mainly based on the French home market; the brand has only made slow progress in international markets. A comprehensive strategy review was carried out during the year under review with the aim of ensuring the sustainable long-term development of the Aubade brand. This led to significant changes in the focus of the collection, brand management and organization in the middle of 2015. The goal is to increase the appeal of the Aubade brand in foreign markets.”
Looking at the current year, the Calida managers stated, “The 2016 financial year began positively, with solid sales growth in the first few weeks of the year. Order books for the pre-order business of spring/summer are slightly below the year-back level in the wholesale sector at Calida, Aubade and Oxbow [the surf division], but we expect this to be more than offset by rising turnover in at-once business and by sales campaigns in our own retail, outlet and e-commerce channels.”
Overall, the executives predicted “we believe business will trend slightly positively in 2016.”
Charts in the Calida annual report show that the Calida intimates and underwear division contributed sales of CHF 128.158 million (about $131.4 million), and the Aubade division CHF 57.008 million (about $58.5 million) to the groups total sales of CHF 358.979 million (about $368.1 million) in 2015.
Of the company’s total operating profit of CHF 88.459 million (about $ 90.7 million), Calida contributed CHF 35.561 million (about $ 36.5 million) and Aubade CHF 15.340 million (about $15.7 million).
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