(Filed Under wholesale Lingerie News). La Perla Fashion Holding reported a huge net loss for 2019, as sales dropped 19.2% during the year. In 2018 the company had reported a sizable net profit.
For 2019 the company lost 89.041 million euros (about $97 million at today’s exchange rates) on sales of 85.821 million euros (about $94 million), compared to a net profit of 50.067million euros (about $55 million) on sales of 106.240 million euros (about $ 116 million) in 2018.
The biggest drop in sales in 2019 came from the company’s retail sector, the La Perla website and its brick and mortar shops. Sales there fell from 94.876 million euros to 74.077 million euros (about $81 million) in 2019.
The company’s wholesale business, where it sells to other retailers (such as Bloomingdale’s, Neiman Marcus, Nancy Meyer and the like) rose slightly, from 11.364 million euros in 2018 to 11.744 million euros (about $13 million) in 2019.
A La Perla spokesperson told BODY that “the company currently counts around 100 stores. Last year it closed 30.” But she could not say how many of the existing stores are free standing shops and how many are “concessions” or shop in shop locations. Asked if any of the La Perla locations are franchises she replied, “not to my knowledge.” The executive pointed to public comments by La Perla’s CEO, Pascal Perrier, who indicated the brand will begin opening new stores in 2020, perhaps including some in China.
La Perla explained that the “decrease in revenues has been driven by delivery delays in the initial phase of the transition period, impact of store closings and discontinuation of product lines other than lingerie and beachwear (ready to wear, shoes, male segment, etc) as well as much lower markdown sales.” The spokesperson confirmed to BODY that La Perla no longer is offering any products for men at all.
The company listed factors in the 2019 revenue decline including:
“• Lost sales from discontinued product categories which are not relevant under the revitalization strategy.
• A reduction in selling space, due to the exit of low productivity retail locations
• Production complications reducing the supply of fresh merchandise to stores, particularly during the first half of the year.
• A decline in promotional activity and discounting.”
Despite the sales decline, La Perla also pointed to the “initial success of the Group’s transformation initiatives” that “drove relative improvements in performance, particularly during the second half of the year. On a like-for-like basis, La Perla’s directly-operated boutiques and concessions (together “physical retail”) experienced double-digit gains in full-price sales during the second half of the year, relative to a decline in the first half. The gains were fueled by increases in core underwear category sales. Overall, the Group achieved positive like-for-like sales growth in physical retail during the fourth quarter. Wholesale/Other revenues increased, primarily due to customers’ positive response to new product lines and the Group’s improved merchandising and customer service.” The company added, “during 2019, gross margin benefited from the reduced promotional activity and supply chain rationalization.”
The company provided a list of key points in it “revitalization strategy” which included:
“• Strengthened management team. La Perla added key talent across its business in merchandising, marketing, commercial, operations and finance functions, building a seasoned executive team, strengthening the larger organization’s core capability.
• Began product revitalization. In design and merchandising, began to develop a product assortment aligned with today’s luxury customer – initial products expected to be present in-store during the second half of 2020.
• Evolved marketing program. Began to evolve marketing imagery, messaging and media consistent with a broader, more inclusive customer base.
• Launched Beauty. Launched La Perla Beauty subsidiary to capitalize on the brand’s opportunity in the fragrance, color and skincare categories.
• Strengthened infrastructure. Initiated upgrade of IT and core information systems, following several years of under-investment.”
In a note accompanying the financial release, Pascal Perrier, CEO of the Group’s main operating subsidiary, declared, “our strategy to transform the business and revitalize the brand has shown encouraging results, demonstrated by the progressive increase in full price sales over the year and improved cost structure. New product lines have been well received by customers, while our marketing continues to evolve in line with our energy and vision to reach a broader, more inclusive customer base.”
Referring to impact of the pandemic, La Perla explained, “subsequent to the year end, the Covid-19 outspread have materially and adversely affected the supply and demand for the Group’s products. Furthermore, the Group has seen a negative impact on its supply chain, its manufacturing functions and its distribution systems. The Board is focused on improving its operations during these difficult times.”
“The main manufacturing operations are based in Bologna, Italy, which has been significantly affected, including a current lock down which has been in force during part of 2020. Furthermore, the impact of this has also resulted in critical interruptions of the company’s distribution system. Finally, the Group has seen a number of temporary store closures since the beginning of this year.” It concluded that “given the uncertainly around the crisis’ forward effect on the economy and consumer spending, the Group has suspended its forward guidance.” — NM
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