Freemans owner Otto makes progress, expects fashion segment recovery

By

Sandra Halliday

Published
May 20, 2021

Otto Group has seen a challenging financial year, but revenue still rose at the company that owns Freemans, Grattan, Bonprix and Quelle, among many other retail and logistics businesses.

It said comparable revenues rose 17.2% to €15.6 billion, while e-commerce revenue grew 25.6% to €9.9 billion in the year to the end of February. In Germany, revenues rose to €7 billion and online revenues were up 24.1% there, beating the country’s growth rate as a whole.

This was reflected in earnings before interest and tax (EBIT) rising by €432 million to €688 million. And pre-tax earnings tripled to €1.104 billion “due to the solid operational performance and, above all, to the disposal of shares”. Final profit for the year rose from €214 million to €971 million.

CEO Alexander Birken said the group acted quickly during the pandemic and was able to “seize the opportunities that presented themselves. It has become clear that customer-relevant technology, a wide assortment of products and personal services are essential assets in the competitive world. At the same time, however, we are aware that we are still living in turbulent times and have to respond to imponderables with a high degree of flexibility and a clear strategy”.

The company didn’t give full details about the performance of all its businesses. But it said that the core Otto operation “was able to post a very positive development, despite considerable fluctuations in demand in its product ranges at the beginning of the financial year”. The number of active customers rose to over 10 million, and revenues increased by a significant 30.2% to €4.54 billion.

Despite the “noticeable consumer reticence for fashion items, especially at the beginning of the pandemic”, fashion retailer Bonprix, which operates in 30 countries, “was able to hold its own” and grow its revenues by 1.4% to €1.76 billion. 

The international Witt Group was able to break through €1 billion in revenue for the first time, “despite pandemic-related purchasing restraint in the fashion sector”.  The omnichannel retailer, specialising in the 50+ customer group, was able to increase its revenues by 1.5%.

And fashion and technology company About You “continued its rapid growth”, despite a decline in the European fashion market, boosting sales by 56.9% to €1.17 billion.

And it seems that in the first few months of the current financial year, group revenues and earnings “continued to develop positively”. 

The company has therefore “set itself new, more ambitious targets for the coming years. In the medium term, revenue is expected to increase significantly higher than the average figures achieved in pre-Covid-19 years, earnings power is to be further increased and investment volumes are to rise while maintaining a solid capital structure”.

To do this, it will “invest heavily in existing strategic business areas” after making significant investments in tech in the latest period. It said this means “the fully-automated integration of partners in the marketplace has been realised and initial investments have already been made in setting up the company's own payment service provider”.

And over the next three years, the group will be investing hundreds of millions of euros in logistics efficiency. Opportunities for mergers and acquisitions “will also become more central in the future”.

Also key for the future will be sustainability and it said 65% of the fibres used for its own and for licensed brands will come from sustainable sources by 2025. The goal of using only sustainable packaging is to be implemented over the next two years. By 2022, the group will also be introducing labelling to identify sustainable products at all group companies.

The group also said the 2021/22 financial year will continue to be impacted by the pandemic. But given the progress of vaccination campaigns in many countries in which the Otto Group operates, and the reduction of pandemic-related restrictions, “a return to some kind of ‘normal’ consumer behaviour is to be expected in the course of the financial year”.

It thinks growth in e-commerce will continue to develop “very dynamically” and revenues are “expected to rise in the clothing segment in particular”.