Premium focus with improved growth and earnings

May 15, 2014, 7:56

On 27 March 2014 IC Companys entered into an agreement to sell its Mid Market division to DK Company A/S. The Group’s continuing operations subsequently consist of the three Premium brands Peak Performance, Tiger of Sweden og By Malene Birger as well as the non-core business comprising the brands Designers Remix and Saint Tropez.

 

Consolidated revenue from continuing operations for Q3 2013/14 amounted to DKK 716 million which is an increase of DKK 49 million, or 7%, compared to Q3 2012/13. In particular the two Premium segments reported higher re-venues. The Group’s gross margin amounted to 55.9% for Q3 2013/14 and was thus at a lower level compared to Q3 2012/13. The operating profit for Q3 2013/14 amounted to DKK 87 million which is an improvement of DKK 19 million compared to Q3 2012/13.

 

  • Revenue from the Premium Outdoor segment for Q3 2013/14 amounted to DKK 278 million (DKK 268 million) corresponding to a growth rate of 4%. The segment has reported satisfactory growth in sales to the wholesale customers whereas sales in the retail channel have been disappointing. The Premium Outdoor operating profit for Q3 2013/14 amounted to DKK 38 million (DKK 27 million).

 

  • Revenue from the Premium Contemporary segment rose by 13% to DKK 331 million (DKK 293 million). This growth rate was particularly attributable to the segment’s wholesale channel as well as insourcing of Tiger of Sweden’s accessory line. The Premium Contemporary operating profit for Q3 2013/14 amounted to DKK 42 million (DKK 34 million).

 

  • The gross margin of continuing operations amounted to 55.9% for Q3 2013/14 compared to 56.5% for Q3 2012/13. The primary reason for this development can be ascribed the foreign currency translation effects.

 

  • The capacity costs rose by DKK 5 million to DKK 313 million. However, the development in costs combined with a higher revenue resulted in a 2.5 percentage points decline of the cost rate to 43.7% (46.2%).

 

  • Operating profit improved by 28% to DKK 87 million (DKK 68 million). The EBIT margin was thus improved from 10.3% reported in Q3 2012/13 to 12.2% in Q3 2013/14. This development is attributable to a higher revenue which more than compensates the lower gross margin and the increased capacity costs.

 

  • On 27 March 2014 IC Companys announced that it had sold its Mid Market division to DK Company. Pursuant to the agreement, DK Company has acquired the entire Mid Market division including all trademarks, commercial rights and obligations as well as employees and retail stores. In the future the Group’s strategic focus will be completely on the continuous development and operation of the three Premium brands. The final closing of the agreement with DK Company is expected to take place by 30 June 2014.

 

Unchanged outlook for continuing operations for 2013/14

In connection with the announcement of the sale of the Mid Market division the Group specified its outlook for continuing operations for 2013/14. The outlook for the financial year 2013/14 is thus unchanged.

 

The Group’s three Premium brands are expected to continue the positive development. Consequently, the consolidated revenue from continuing operations for 2013/14 is expected to attain a level of DKK 2,560 – 2,580 million.

 

The consolidated operating profit for the financial year 2013/14 is expected to attain a level of DKK 195 – 215 million.

 

Investments for the financial year 2013/14 are expected to attain a level of DKK 70 – 90 million primarily for an expansion of the distribution in the two Premium segments.

 

 

Copenhagen, 15 May 2014

 

IC Companys A/S

 

Mads Ryder

Group CEO

 

 

Rud T. Pedersen

Group CFO