Outlook

Outlook for 2016/17 (updated May 17, 2017)

Analysis carried out during the past two to three months has uncovered operational challenges in respect of the distribution as well as inventory overbuying leading to increased discounted sales. As a consequence of the decision to reduce the amount of discounted sales, primarily in Tiger of Sweden’s wholesale distribution, a significantly negative effect on consolidated revenue is expected.

On the basis of the above, we now expect a revenue growth rate of 3-4% measured in local currency (previously 5-6%) for the financial year 2016/17. Based on the current exchange rates on the Group’s primary sales currencies (SEK, NOK and GBP), this corresponds to a reported revenue growth rate of approx. 2-3% (previously 4-5%).

In addition to the above-mentioned negative effect on revenue, the decision to reduce discounted sales also entails inventory write-downs, which subsequently will have a negative effect on earnings. A number of initiatives to clean-up various parts of the wholesale and retail distribution at Tiger of Sweden and By Malene Birger will also have a negative effect on earnings. Therefore, the EBIT-margin, before considering the effect of non-recurring costs attributable to the implementation of the new structure in IC Group, is expected to attain a level of 5-6% (previously 7-8%).

The non-recurring costs attributable to the implementation of the new structure are still estimated to amount to approx. DKK 30 million leading to improved earnings of approx. DKK 30-40 million with effect from financial year 2017/18.

The EBIT margin is subsequently expected to attain a level of 4-5% (previously 6-7%) for the financial year 2016/17.

Outlook for 2016/17 Realized 2015/16 Previous guidance Current guidance Status
Revenue growth measured in local currency 1.9% 5-6% 3-4% Changed
Revenue growth measured in reporting currency (DKK) 1.0% 4-5% 2-3% Changed
EBIT margin 9.1% 6-7% 4-5% Changed
CAPEX (in % of full-year revenue) 3% 3-5% 3-5% Unchanged

Last update: May 17, 2017