Van de Velde: ’Tough’ 2011 for Intimacy Stores

Belgian public company Van de Velde announced its annual results, noting of the prominent U.S. retailer it controls, “Intimacy experienced a tough 2011 and must return to turnover growth in every store. Van de Velde will take over operational management from the minority shareholders in May 2012 and has a clear vision on profitability improvement. 18 or 19 stores will be open by the end of 2012.”

Van de Velde also produces the Marie Jo, Andres Sarda and Prima Donna lingerie brands and controls additional retailers in Europe. “Van de Velde’s organic growth, excluding the retail turnover of Intimacy and Rigby & Peller, rose 2.2%,” according to the statement accompanying its results. This growth is due to several factors. There was “1.9% growth in the wholesale business. This growth is primarily attributable to a positive price effect, growth within Sarda and the rising market share of Van de Velde brands within Intimacy.” In addition, there was “28% growth at Oreia [another retailer in Europe]. Store-to-store turnover growth at the Oreia stores in Germany was 10%.”

The company noted that “When retail turnover at Intimacy (full year 2011 versus 8 months in 2010) and Rigby & Peller (5 months in 2011) is taken into account, Van de Velde’s consolidated turnover was €179.8m, a rise of 8.1% versus 2010.” Van de Velde explained that “For the full year 2011 Intimacy generated turnover of $38.4 million, a rise of 8.1% versus 2010. Turnover growth within Intimacy was exclusively due to the opening of new stores.” In addition, “For the period August-December Rigby & Peller generated turnover of £3.8 million.”

Van de Velde’s consolidated EBITDA rose 2.8% to €53.8 million. “The rise in EBITDA is primarily attributable to the slight rise in gross margin due to a favorable price and exchange rate effect. In 2012 the gross margin will be a little lower, as the full effect of the rise in costs first noticed in 2011 (primarily labor costs in China)

will be felt in 2012.” The company statement continued, “The rise in the gross margin in 2011 is in part negatively offset by a rise in fixed costs to support growth (e.g. marketing, sales organization, IT infrastructure). Intimacy generated stand-alone EBITDA of $0.4m versus $1.4m in 2010. This is primarily due to a fall in turnover on a store-to-store basis and a rise in fixed costs.

For the financial year 2011 the board of directors will propose to the general meeting of shareholders the same dividend as in 2010, i.e. €2.1500 per share (net dividend of €1.6125 per share). This means a pay-out ratio of approximately 70%.

Looking ahead at 2012, Van de Velde noted that “Given the relatively high percentage of direct retail turnover (Rigby & Peller, Intimacy) it will be more difficult to make precise forecasts from now on,” adding that “The trend in wholesale turnover is rather steady in 2012.”

According to the company statement, “In 2012 there will be a phased conversion of Oreia to Rigby & Peller in Germany and Spain. We expect growth in the organic turnover of these stores, as well as in the number of stores.”

“Rigby & Peller will consolidate its position in London and is expected to continue its expansion beyond London from the autumn.”

Van de Velde declared that it “is a leading player in the luxury and fashionable women’s lingerie sector. Van de

Velde is convinced of the merits of a long-term strategy based on developing and expanding brands around the Lingerie Styling concept (fit, style and fashion), especially in Europe and North America.