Company Announcement no. 10/2012 – Copenhagen 7 August
Consolidated revenue for 2011/12 amounted to DKK 3,819 million corresponding to a reduction of 3% compared to 2010/11. Efficient price campaigns and sales promoting activities resulted in the Group being able to retain its market position, but did at the same time, however, increase the pressure on the Group’s gross margin which suffered a substantial decline. The Group has embarked on a number of structural changes to reduce the cost base which started to have an impact in H2 2011/12. Consolidated operating profit for 2011/12 amounted to DKK 130 million corresponding to a setback of 60%. However, the sales promoting efforts ensured a solid cash flow and a positive inventory development.
- Revenue for the financial year 2011/12 amounted to DKK 3,819 million (DKK 3,925 million) corresponding to a setback of 3% compared to last financial year. The last reported outlook indicated a level of DKK 3,800-3,850 million. Revenue for Q4 2011/12 amounted to DKK 680 million corresponding to a setback of 5% compared to Q4 2010/11.
- Wholesale revenue amounted to DKK 2,356 million (DKK 2,395 million) corresponding to a setback of 2% compared to last financial year. Wholesale revenue for Q4 2011/12 declined by 3% to DKK 337 million compared to Q4 2010/11.
- Retail revenue amounted to DKK 1,464 million (DKK 1,531 million) corresponding to a decline of 4% compared to last financial year. Retail revenue for Q4 2011/12 decreased by 8% to DKK 343 million compared to Q4 2010/11.
- Gross profit amounted to DKK 2,154 million (DKK 2,322 million). The Group thereby generated a gross margin of 56.4% (59.1%) corresponding to a decline of 2.7 percentage points compared to last financial year. The gross profit for Q4 2011/12 improved by 0.3 percentage points to 58.4%.
- Capacity costs amounted to DKK 2,024 million (DKK 2,000 million) corresponding to an increase of 1% compared to last financial year. The Group thereby achieved a cost rate of 53.0% (51.0%) corresponding to an increase of 2.0 percentage points compared to last financial year.
- After having adjusted for non-recurring costs of DKK 23 million (DKK 16 million) and the negative impact attributable to provisions for bad debts of DKK 24 million (positive effect of DKK 12 million), consolidated capacity costs were thus reduced by 1% compared to last financial year and by 2% compared to Q4 2010/11.
- Operating profit amounted to DKK 130 million (DKK 321 million). The Group thus generated an EBIT margin of 3.4% (8.2%). The last reported outlook indicated a level of DKK 130-150 million. Operating loss for Q4 2011/12 amounted to DKK 71 million which is a decline of DKK 27 million compared to Q4 2010/11.
- Cash flow from operating and investing activities rose by DKK 73 million to DKK 150 million (DKK 77 million) for 2011/12.
- Investments for the financial year 2011/12 amounted to DKK 106 million (DKK 102 million) which is higher than expected (the last reported outlook indicated a level of DKK 80-100 million). This deviation is attributable to a temporary difference of IT investments and leasehold improvements.
- Order intake for the winter collection 2012 is expected to record a setback of 5% reported in local currencies.
- The Board of Directors recommends that a dividend of DKK 25 million corresponding to DKK 1.50 per ordinary eligible share is distributed.
- As the Group’s revenue and earnings targets for the financial year under review were not achieved, no warrants will be granted to the Executive Board and other executives for the financial year 2011/12.
Outlook for 2012/13
Management expects that the volatile market conditions will continue in 2012/13. Consequently, a same-store setback and the pressure on the Group’s wholesale customers are expected to continue in 2012/13. However, the pressure on the Group’s gross margin is expected to abate in 2012/13 due to normalisation of discounts and sales activities of the industry. Furthermore, the new sourcing structure and continuous optimisation are expected to have a positive impact on the Group’s gross margin.
In the light of the development for the financial year 2011/12, the Group thus expects to close down a number of stores in 2012/13. In alignment with the corporate strategy Management expects to close down the retail stores in the Mid Market and Fast Fashion segments positioned outside the core markets of the individual brands.
As a consequence of the Group’s earnings development, the Management expects that the efforts of reducing costs will be intensified in 2012/13.
Based on this, the Management expects the consolidated revenue for the financial year 2012/13 to be lower compared to the financial year 2011/12, however, the consolidated operating profit for the financial year 2012/13 is expected to attain the same or a higher level compared to the financial year 2011/12.
Investments for the financial year 2012/13 are expected to attain the same level as the financial year 2011/12 primarily for an expansion of the distribution in the Premium segment.
Chief Executive Officer of IC Companys A/S Niels Mikkelsen commented;
“The reported results for 2011/12 are, in spite of the challenging market conditions, both disappointing and dissatisfactory. However, the direction for the Group is clear; the efforts of reducing fixed costs will be intensified, resiliency must be enhanced by improving the flexibility and variability of the costs and IC Companys must gradually be developed into a group where the majority of revenues is attributable to brands in the Premium segment. Our future top priority is to ensure a continuous improvement of the Group’s earnings.”
IC Companys A/S
Chief Executive Officer
Chief Financial Officer
Please direct any questions regarding this announcement to:
Head of Investor Relations and Communication
+45 32 66 70 93
This announcement is a translation from the Danish language. In the event of any discrepancy between the Danish and English versions, the Danish version shall prevail.