Calida Exits Erlich Textil Taking Big Impairment

As it revealed preliminary financial results for the first half of 2023, Calida Group announced it is apparently shutting down Erlich Textil, a new brand it acquired just last February, revealing a “significant impairment of CHF 23-25 million” (Swiss francs, about $25.5 million to $27.8 million at current exchange rates).

Noting that “Erlich Textil is reported as a discontinued operation,” Calida complained that “the development of sales has deteriorated to an extent that makes the continuation of Erlich Textil no longer strategically sensible.” Calida added that “impairments (goodwill and brand among others)” will registered on June 30th when it releases its final financial report for the first six months of 2023.

Founded in 2016, Erlich Textil was heralded by Calida at the time of its acquisition of a 90% share, as a “young” and “sustainable German lingerie brand,” that generated sales of 7 million euros (about $7.4 million) in 2021. “The pure online trader (D2C) attracted attention in the past years with its continuous growth and a scalable digital infrastructure. With its underwear products manufactured in Europe from top-quality textiles made from organic and renewable materials, Erlich Textil creates sustainable alternatives for the underwear market.”

The Switzerland-based Calida, which owns the Calida, Aubade and Cosabella brands, also reported that for the Group as a whole, “expected currency-adjusted sales and EBIT from continuing operations at the end of 2023 [are] expected to be below high previous year’s level.” In 2022 Group net income rose to 21.8 million CHF (about $23.9 million) on sales of 323.9 million CHF (about $354.7 million).

Calida reported that Cosabella, which it acquired in May of 2022, “performs well in the current year and increases sales year-on-year. Nevertheless, sales are still significantly below the expectations.”

In a little more than half of 2022 as part of Calida, Cosabella provided the Group an operating contribution of 3.357 million CHF (about $3.7 million) on sales of 14.173 million CHF (about $15.5 million). Referring to Cosabella in 2022, Calida stated that while online sales rose, “wholesale business declined, by contrast, as merchants first reduced high inventories remaining due to the pandemic and so were cautious about buying fresh stock.” At the time of acquisition, Calida had revealed that Cosabella generated 2021 sales of “$29 million and an EBITDA of $4.8 million.” ­— NM