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Big Loss For Cosabella Parent Calida In 2023


(Filed Under Financial and General Interest News). For the year 2023, Calida Group reported a loss of 66.499 million Swiss francs (about $75.5 million at current exchange rates) on sales of 304.428 million Swiss francs (about $345.7 million) compared to a profit of 37.020 million Swiss francs (about $42.0 million) on sales of 319.069 million Swiss francs (about $362.3 million) in 2022.

Executive chairman Felix Sulzberger explained “the 2023 business year was defined by extensive financial, organizational and operational adjustments and corrections,” which were “prompted by under performing M&A transactions.”

He was referring to the acquisition of Cosabella and Erlich Textil, both in mid 2022. And, writing in the introduction to the Calida Group annual report, admitted that the company made a “fundamental misjudgment of the growth potential of the newly acquired brands Erlich Textil and Cosabella. In the year under review, this prompted valuation adjustments of 20.8 million Swiss francs at Erlich Textil [about $23.6 million] and 47.8 million Swiss francs [about $54.3 million] at Cosabella. An in depth analysis of the acquired brands led to the insight that Erlich Textil offers neither the sales nor the profitability potential to support the strategic development objectives of the Calida Group, and the brand was sold as a result. By contrast, the analysis of the U.S. lingerie brand Cosabella confirmed in principle the underlying strategy to tap the U.S. market via this acquisition. Sales growth at Cosabella remained far below expectations, however, and also revealed significant weaknesses at the operational and structural levels. In 2023, we went about addressing these weaknesses, looking to develop Cosabella into a profitable, attractive and competitive lingerie brand in the U.S. market, with potential for growth. This plan is realistic but will require several more years of Group financial and human resources.”

Calida Group currently owns three underwear brands as well as Lafuma Mobilier, an outdoor furniture company. Net sales for the Calida brand in 2023 totaled 157.701 million Swiss francs (about $179.1 million) down slightly from 155.497 million Swiss francs the year before. Of that total 111.001 million Swiss francs came from brick and mortar stores and the rest from online sales last year. “Operating contribution” to parent Calida Group was 44.261 million Swiss francs (about $50.3 million).

Net sales for the Aubade brand in 2023 totaled 68.922 million Swiss francs (about $78.3 million), down from 74.238 million Swiss francs in 2022. Of the total sales last year, 53.136 million Swiss francs came from brick and mortar stores, the rest from e-commerce. “Operating contribution” to the parent Calida Group was 20.233 million Swiss francs (about $23.0 million).

Net sales for the Cosabella brand in 2023 were 22.584 million Swiss francs (about $25.6 million), with 15.853 million Swiss francs (about $18.0 million) coming from direct to consumer business and the rest from brick and mortar channels. However, “operating contribution” to the parent Calida Group for the entire year was just 307,000 Swiss francs (about $349,000). In 2022, even though Cosabella was owned by Calida for only part of the year, the brand generated sales of 14.173 million Swiss francs (about $16.1 million) for the parent company, and earned an “operating contribution” of 3.357 million Swiss francs (about $3.8 million) for Calida Group for the year.

Calida Group had reason to hope for better performance from Cosabella in the period following the takeover. When it announced the acquisition in May of 2022, for “a total package of $80 million including earn out,” it revealed that Cosabella had 2021 sales of “$29 million and an EBITDA of $4.8 million.”

Silvia Campello, who replaced brother Guido as general manager of the Cosabella brand late last summer, explained that in 2023 “the challenges of market volatility, continued excess inventory positions across the landscape of U.S. retailers, hesitant consumer sentiment and geopolitical instability hampered near-term expectations. Despite the very challenging environment, Cosabella was able to grow its D2C business by more than 10% year over year, now accounting for 70% of total net sales.”

Interestingly, Campello endorsed print media as part of the reason for the brand’s success in direct to consumer marketing. She explained that in 2023, “a shift to direct mail campaigns ensured higher customer acquisition and retention rates with lower spend than traditional performance marketing. Leveraging this new channel proved essential to mitigate the continued increase in advertising costs felt globally.” — NM


more Financial and General Interest News >>

Published 02-29-2024 by -

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