Operational problems push Wolford into the red

Wolford revealed on Friday that revenue for the first nine months of the current FY dropped by almost 8% after experiencing a weak first-half due to “a difficult market environment” and operational problems.

Spring summer 2017 - Wolford

The hosiery brand said a 4% increase in third-quarter revenue failed to offset weak results in the first half, resulting in revenue for the nine months to January of €119.05 million. This represents a 7.5% drop from the previous year, but the business said the figure was down by 6.2% when adjusted for currency effects.

A breakdown of the nine-month results shows that Wolford-owned retail stores experienced a 6.6% drop in revenue, while the wholesale business fell by 7.3%. The company’s e-commerce channel was a bright spot with a 4.4% increase in revenue year-on-year.

While operating results rose to €3.53 million in the third quarter, they plunged to a loss of €4.72 million in the nine months, compared with €2.16 million in the previous year, due to the first-half issues.

The company partly blamed difficult market conditions for its poor performance and revealed that it had identified some internal mistakes in the management of goods for the retail sector. This led to inefficiencies in the planning and management of retail space in the first half-year, which together with delayed delivery dates for the fall/winter collection resulted in “a considerable decline in revenue as well as costly post-production and significantly higher inventories.”

The issues have been addressed and starting from June, Wolford will supply products to its own retail stores as well as wholesale customers on a monthly basis, except for the months of May and December, it said.

The company expects to end the financial year with an operating loss of between €8 million and €10 million because it will not be able to compensate for the losses generated in the first half.

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