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  • Nick Monjo

Van de Velde Profit Hurt by Intimacy, Top Form

For the first half of 2012, profit for Van de Velde fell to €22.6 million ($29 million) on rising sales of €98.7 million ($126.8 million), compared to a profit for the same period last year of €24.6 million ($31.6 million) on sales of €97.9 million ($125.8 million). The Belgian firm is a significant player in the wholesale and retail lingerie business in Europe and the U.S. It owns the Marie Jo, Andres Sarda and Prima Donna brands and operates retail stores in Europe and the U.S. including Intimacy lingerie stores here.

Among items in its summary of results, the company noted, “A fall in retail turnover at Intimacy by around 10% in local currency and 1.5% in euro. Van de Velde took over operational management of Intimacy since 1 May 2012 and has implemented a plan that is expected to start growing turnover in early 2013.” In addition, Van de Velde listed these developments, “On a like-for-like basis (including like-for-like deliveries and excluding retail turnover of Rigby & Peller UK), consolidated turnover fell by 2.8%,” adding that, in addition to the situation at Intimacy, there was a “3.0% fall in wholesale turnover. This trend is fairly general, with the exception of North America, the UK and part of Scandinavia. Within the core markets, the fall in turnover is limited in Germany”; “in Europe, retail turnover at Rigby & Peller (formerly Oreia) rose by over 8% due to the opening of new stores in Germany and Spain;” and “The contribution of retail turnover at Rigby & Peller in the UK was £4.5 million (€5.5 million). This represents growth of around 4.5% on a store-to-store basis compared with the previous year.”

The company also declared that “EBITDA for the first half-year (€31.3 million or $40.2 million) was around 7.8% lower than in the same period last year (€34.0 million or $43.7 million)” and listed these factors:

“- A fall in wholesale turnover combined with a slightly lower gross margin compared with last year, primarily due to the rise in stitching costs in China.

- A rise in a number of recently implemented costs promoting growth, such as sales costs and costs related to the expansion of the retail organization.

Other fixed costs are a little lower than in the same period last year.”

The poor results at Intimacy provided one positive note for Van de Velde: it will end up paying less for the retailer than expected. “On a like-for-like basis the financial result was a little higher than in the same period last year. However, an exceptional result of €2.9 million ($3.8 million) was recognized in the first half-year of 2012

as a consequence of a revision of the price paid for a 35.1% shareholding in Intimacy (transaction in April 2010). The final price will be determined at the beginning of 2013. Based on a best estimate a receivable from the selling party (the minority shareholder) has been raised by €2.9 million ($3.8 million) to €6.6 million ($8.3 million).

Van de Velde results for the first half were also hurt by first half losses at Top Form International Ltd., a major Chinese lingerie maker with shares listed on the Hong Kong stock market, and a company that is part owned by Van de Velde (in 2001 it became a minority shareholder). For the six months ended June 30, 2012 Top Form reported a loss of $6.7 million (52.1 million Hong Kong dollars). Van de Velde noted, “There was a downturn in the contribution of the minority participations (result on the basis of the equity method), which is due to Top Form,” and it listed three components to the situation:

“- Top Form issued a profit warning on 3 July 2012. On 24 August 2012 Top Form announced preliminary financial data with regard to the size of the annual loss (1 July 2011-30 June 2012).

- Van de Velde has already recognized the full share of this loss in the half-year figures (€2.0 million). Top Form has a negative impact on the profit before taxes of €1.7 million (including dividend in financial income).

- The Board of Directors of Van de Velde will decide whether further impairment of the participating interest in Top Form is needed in the course of 2012 based on further developments at Top Form.’

Commenting on prospect for the full year, 2012, the Van de Velde statement noted, “2012 continues to be tough and we cannot confirm consolidated turnover growth yet. Van de Velde continues to invest additional resources in marketing and sales programmes and retail. Based on the above, Van de Velde also expects 2012 EBITDA to fall in line with the fall during the first half of the year. “


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