(Filed Under wholesale Lingerie News). Van de Velde reported its sales fell 3.9% in the first half, while net profit plunged 25% as the company spent heavily on information and communications technology (ICT) and “eCommerce functionalities.” It said it expect these trends to extend to the full year.
The company earned 15 million euros (about $17.4 million at current conversion rates) on sales of 110.9 million euros (about $128.5 million) in the six months ended June 30, 2018, compared to a profit of 20 million euros on sales of 115.3 million euros during the same period last year.
Based in Belgium, Van de Velde owns the Marie Jo, PrimaDonna and Andres Sarda wholesale brands, as well as international retail chains including the Rigby & Peller (formerly Intimacy) stores in the U.S.
The company said its “fashion collection performed well, posting growth, while the stayer products experienced a tough first half of the year. Marie Jo performed well, due to the successful launch of the swimwear collection. Retail turnover in the first half of 2018 on a like-for-like store basis rose by 0.6% compared with the same period in 2017 and by 4.3% at constant exchange rates. Turnover grew by 7.2% in Europe, but slightly fell by 1.6% in the United States. As a consequence of the closure of loss-making stores, the total reported turnover of retail rose slightly by 0.1%.”
CEO Erwin Van Laethem added, “the fashion retail market was under pressure in our core markets globally in the first half of the year. The lower number of people in high streets and the change in shopping behavior had a negative impact of up to more than 2% on retail turnover. Within this context our brands have held up well, we experienced a successful launch of Marie Jo Swim and we saw growth in the new distribution channels. This confirms that the roll out of an omni channel approach with a central role for specialty boutiques is very important. To develop the different aspects of that omni channel approach, Van de Velde has set up working groups of specialty boutique owners. This is a unique approach.”
Addressing the impact on profits, CFO Bart Rabaey explained the company “continues to invest in a scalable platform for future growth. These costs put pressure on profitability in the short term. The initiatives are being rolled out on schedule. Delivery reliability in the first half of 2018 was better than ever before. The ICT hardware was upgraded successfully. The development of the new ICT and eCommerce functionalities and the raising of process efficiency are ongoing.”
Looking ahead, CEO Van Laethem cautioned, “Van de Velde operates in an uncertain retail fashion environment and wishes to capitalize on this changing market. As a strong company with firm foundations, the company has decided not to cut the expenditure needed to build a scalable platform for future international growth. However, this puts pressure on the results in the short term.”
Thus, the company said it “expects a modest decrease in turnover on a comparable basis over the year as a whole. This is expected to result in a very strong profit decline in comparison with historic results (based on comparable EBITDA) of Van de Velde in 2018, as a consequence of the expenditures with regard to the initiatives for future growth.”
Currently the number of Rigby & Peller stores in the U.S. remains stable at nine. — NM
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