Bestseller profits strong but sales up "modestly", menswear key for earnings growth
today Nov 23, 2018
Bestseller, the Danish fashion retail giant that owns Vero Moda and Jack & Jones among numerous other brands, reported its 2017/18 annual results on Friday and talked about “great progress on the bottom line”, although it saw only “moderate” turnover growth.
Net turnover rose 3.3% to €3.3 billion, although the fact that pre-tax profit was up 14.9% to €387 million shows that the company is able to squeeze more profit out of every sale, something many rivals have struggled to do in the last year.
Unsurprisingly, Anders Holch Povlsen, the billionaire owner and CEO of the company, said that he was “happy with this year’s results,” but he warned that current conditions are tough.
“If we look more specifically at the first quarter of the new financial year, we have not managed to steer clear of the current challenges in the market,” he said. “It is vital that we pull together in all parts of our company.”
Looking back at the last financial year, he said that the business’s “female brands have formed the basis of our turnover growth, while our male brands’ gross profit development is the main reason for our positive bottom line,” which is certainly interesting.
It suggests that even at the most successful companies, womenswear is selling well but is less likely to generate meaningful profits as prices come under pressure. Meanwhile it's perhaps easier to get men to pay full price.
Elsewhere, he said that the “overall results from our kidswear brands have proven disappointing, but we are paying close attention to the area and expect to see a positive change in the current financial year.”
The CEO added that growth is his key focus and "we have to find a way to grow more than we do today.” And he added that the group needs to improve its webstore operations, investing in this area and further digitising the overall company.
But digital won't be the only focus and the company is planning to open 250 new stores in the current 2018/19 business year.
The CEO also said that “if we do not stay on our toes, we could end up making life more difficult for ourselves.”
For the year ahead, Bestseller expects to see “modest gains from the recent divestment of our Middle East business, which has been running at a loss for some time.”
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