Revenue and earnings growth

Nov 14, 2014, 9:19

Group revenue was DKK 828 million (DKK 818 million) in Q1 2014/15, an increase of 1% (3% in local currency) compared to the same period last financial year. Revenue increased for all three Premium brands by a total af 7% in local currency, which more than outweighed revenue decrease of 17% for the Group’s non-core business. Gross margin was 55.2%, which is lower than that of the same period last financial year (55.9%). Operating profit came to DKK 141 million, an increase of DKK 3 million compared to the same period last financial year.

 

 

• Peak Performance generated revenue of DKK 353 million for Q1 2014/15 (DKK 344 million), corresponding to growth of 3% (5% in local currency). Growth in sales to wholesale customers was satisfactory, while store closures contributed to a decline in retail revenue. Operating profit came to DKK 75 million (DKK 69 million).

 

 

• Tiger of Sweden increased revenue by 7% (11% in local currency) to DKK 269 million (DKK 251 million). Revenue increased across all sales channels, while in terms of geography growth was generated primarily in the Nordic region and Central Europe. Operating profit was DKK 47 million (DKK 42 million).

 

 

• By Malene Birger increased revenue by 6% (7% in local currency) to DKK 97 million (DKK 91 million) primarily as a result of increased sales to wholesale customers. Geographically, growth was generated mainly in the Nordic region. Operating profit was DKK 10 million (DKK 12 million).

 

 

• Revenue for the Group’s non-core business decreased by 17% and was not significantly impacted by exchange rate effects. This decrease was primarily driven by a decline in sales to wholesale customers reported by Saint Tropez as a result of a reduced order intake from the Companys stores.

 

 

• The Group’s gross margin was 55.2% in Q1 2014/15 against 55.9% in the same period last financial year. Mix effect of goods sold, change in distribution set-up and negative exchange rate effects were contributory factors to this performance.

 

 

• Capacity costs were reduced by DKK 4 million to DKK 315 million. Positive exchange rate effects contributed significantly to this outcome. Following the divestment of the Mid-Market division, idle capacity costs had a negative non-recurrent impact of DKK 5 million on the Group’s performance in Q1 2014/15. The combined effects of the cost development and increased revenue led to an expense ratio of 38% against 39% in the last financial year.

 

 

• Operating profit increased to DKK 141 million (DKK 138 million), corresponding to an EBIT margin of 17.1% (16.9%), as a result of increased revenue and reduced capacity costs more than outweighing the reduced gross margin.

 

Outlook for 2014/15 unchanged

 

Since the Group’s Premium brands – Tiger of Sweden and By Malene Birger in particular – are expected to continue the positive development in 2013/14, the Group expects total revenue to increase in the financial year 2014/15.

 

It is further expected that in the financial year 2014/15, all Premium brands of the Group will increase EBIT and that the Group’s non-core business will maintain its current earnings level.

 

For the Group as a whole, in 2014/15 EBIT will be negatively affected by capacity costs so far covered by the divested Mid-Market division.

 

After payment by DK Company A/S for a number of agreed transition services, these capacity costs constitute about DKK 45 million. The Group will seek to reduce these costs on an ongoing basis in 2014/15 to prevent these costs from impacting the next financial year, 2015/16.

 

Investments in the financial year 2014/15 are expected in the region of 3-5% of revenue.

 

At the 2014 Annual General Meeting, it was resolved that a dividend of DKK 3.00 per ordinary share be distributed to shareholders, corresponding to DKK 50 million. The Bord of Directors expects to distribute extraordinary dividends of DKK 100 million in Q2 of the financial year 2014/15.

 

Copenhagen, 14 November 2014

 

IC Group A/S

 

Mads Ryder

Group CEO

 

Rud T. Pedersen

Group CFO