IC Group has tough Q3, Tiger and By Malene Birger struggle
today May 3, 2018
Times are tough at Denmark’s IC Group with the Tiger of Sweden and By Malene Birger owner reporting weak sales. And although consolidated operating profits are rising, gross profit is down and it clearly faces huge challenges.
Fresh from news of it selling its Peak Performance brand, it reported its nine-month results on Thursday and said that in the period to March 31, consolidated revenue dropped to DKK2.17 billion from DKK2.256 billion. The consolidated operating profit figure rose to DKK256 million from DKK228 million and the EBIT margin lifted to 11.8% from 10.1%. However, gross profit dropped to DKK733 million from DKK 806 million and while the gross margin increased by 0.8 percentage points to 60.9%, that was mainly due to the first-half performance, and the Q3 margin dipped.
Q3 was certainly difficult with its star brands finding growth to be elusive. In the quarter, Tiger of Sweden revenue dropped 14.6% to DKK217 million, a fall of 11.9% in local currencies. Wholesale underperformed but retail also fell and that dragged operating profit down to DKK18 million from DKK33 million, while the EBIT margin fell to 8.3% from 13% due to higher costs.
By Malene Birger also went into decline, its revenue dropping 9.7% to DKK84 million (or 7.8% in local currencies). Again wholesale was the big problem although retail was boosted by online sales. Operating profit fell to DKK4 million from DKK6 million while the margin dipped to a low 4.8% from 6.5%.
And did the group’s other brands help? Not really. Consolidated revenue here was DKK78 million, down 15.2%, or 14.6% in local currencies, with an operating loss of DKK9 million (worse than the DKK2 million of a year ago). The EBIT margin was a negative 11.5%.
The company said its full-year expectations are unchanged with predictions of a “minor revenue reduction” year-on-year. Tiger of Sweden will see a significant sales and earnings drop, but a revenue decline at By Malene Birger will come with significantly higher earnings.
It’s interesting that the company has sold Peak Performance as the unit generated higher revenue over the nine months (up 5.8% to DKK967 million) and higher operating profit (up to DKK163 million from DKK144 million).
The company will distribute the proceeds of that sale to shareholders and will “continue to operate and invest in the group’s other brands in order to maximise their future values.”
However, it also said that it will “on a continuous basis consider when it is in the best interest of the shareholders to divest these brands, and IC Group will act accordingly when the time and conditions are favourable for both the shareholders of IC Group and the brands.”
Copyright © 2019 FashionNetwork.com All rights reserved.