IC Group has weak Q1, but Tiger of Sweden is strong

By

Sandra Halliday

Published
Nov 6, 2018

Tiger of Sweden and By Malene Birger owner IC Group’s Q1 wasn’t a great one as the company reported revenue from continuing operations of DKK379 million, down 18.3% from DKK464 million a year ago as both wholesale and retail stores struggled.

And its operating profit in the three months to September 30 plunged too, free-falling to DKK14 million from DKK69 million before non-recurring costs linked to the transformation of the group. That led to a small EBIT margin of 3.7% compared to 14.9% last financial year. And if those one-off costs were included in the mix, the profit dropped to DKK8 million for an EBIT margin of 2.1%.

Gross profit fell to DKK205 million from DKK287 million and the gross margin declined by 7.8 percentage points to 54.1%.

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As we said, not great. So what happened during the quarter? Well, the company cited the weather as an issue, something that many of its peers globally have blamed for under-performance during the summer and early autumn.

But it said that Tiger of Sweden was “executing in line with its present strategic business plan which is reflected in growth reported for the coming collections as well as a strengthened visual identity towards the consumer.”

And By Malene Birger? That unit “is working determinedly on bringing the brand in a more international direction.” 

Meanwhile the performance at the firm’s Saint Tropez operation in physical retail is “challenged by a difficult retail environment, and the brand is thus focusing on consolidating its store portfolio.”

Despite the weak quarter, the group’s expectations for the financial year 2018/19 as a whole are unchanged.

Tiger of Sweden, revenue is expected to increase for the full year, while its nominal earnings are expected to be the same as last financial year. Growth will be seen in international wholesale and e-commerce, but higher costs for staff and marketing will have a negative impact on earnings.

At By Malene Birger, revenue is also expected to increase while nominal earnings, again, are expected to be flat year-on-year. Similarly to Tiger, higher staff costs will offset any benefit from expected higher wholesale and e-tail sales.

Saint Tropez revenue, meanwhile, is expected to decline, although nominal earnings should improve compared to the last financial year. The lower revenue will be caused by both the wholesale channel and by retail, due to store closures. But the cost-cutting measures implemented during financial year 2017/18 will have a positive impact on earnings.