Gerry Weber hails Q1 turnaround progress but still has lots of work to do

By

Sandra Halliday

Published
Mar 16, 2017

Gerry Weber International has had a bruising time in recent periods but there seems to be light at the end of the tunnel as the firm recovers on the back of a carefully controlled turnaround strategy.

But that does not yet mean sales and profits rises all round. The German fashion giant is one of the country’s biggest listed fashion firms and reported flat net earnings. It made only €1.2m, or €0.03 per share, in Q1, the same as a last year’s first quarter. And its sales were down 2.1% to €209.2m. Sales at core brands Gerry Weber, Taifun and Samoon were down an even worse 2.4% and comp sales fell 3.4%.

So why did the company’s share rise over 5% Thursday morning? Well, the sales fall was explained by it having fewer stores rather than falling demand for the brands as a whole. And the key profits figure for earnings before interest, tax, depreciation and amortisation (Ebitda) was up an encouraging up 7.7% to €15.6m, while its Ebit figure rose 5.1% to €4.1m.

That is a clear sign of a company on the comeback trail.

Highlights included the Gerry Weber brand’s core wholesale segment seeing sales up 11.1% (partly due to delivery date shifts), and margin improvements at Hallhuber. It was able to improve its gross margin significantly from 58.9% to 64.5% “due to a better price structure”.

CEO Ralf Weber hailed the first three months of the financial year as one in which its ‘Fit4Growth’ turnaround programme  “is effective and is beginning to bear fruit.”

He said that the strategy is helping to modernise the core brands and is boosting their cost structure.

But he stressed that the firm “must now continue to implement the realignment with great determination in order to return to profitable growth after the stabilisation phase.”

Not that he expects any instant improvement on the sales front. He predicted that full-year sales would fall anywhere between 2% and 4%.