Outlook

Outlook for 2016/17

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.

Investments for the financial year 2016/17 are expected to attain a level of 3-5% of the annual revenue (unchanged). These investments are undertaken to maintain existing assets – including store furniture and equipment – as well as in connection with new store openings.

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