Tom Tailor Reset programme yields good results

By

Sandra Halliday

Published
Nov 10, 2017

Management at Tom Tailor Group should be jumping for joy this week with the German company saying its Reset programme is ahead of expectations and it’s “well on the way to achieving the goals” it set itself last year after a bruising period saw it closing stores, cutting brands and the exit of its CEO.

In fact, in some areas it’s “close to surpassing” those goals it said as it released its nine-month results statement.

The Reset strategy shift was launched last year after a period of sales and profits pain as it faced the challenge of changing consumer behaviour and taste.

So the result of all the changes it has made, in the latest period, turnover may have been down slightly to €686.2m from €695.1m, but that was due to the aforementioned strategic exit from underperforming stores and underperforming countries.

And there was much better news on margins and profits. The gross margin rose fairly strongly to 56.7% from 53.6% and profit on an ebitda basis soared as much as 66.6% to €52.8 million. Pre-tax profit swung from a loss of €4 million a year ago to earnings of €26.1 million and the company now has a much stronger operating cash flow position.

Of the two core brands, Tom Tailor saw retail turnover up 1.1% to €213.6 million with wholesale growing 2.9% to €270.7 million. The Bonita brand’s operating profit was up “significantly” but its sales dropped by 8.6% to €201.9 million, again as a result of the Reset strategy’s store closure programme.

The company said the second half has seen it driving forward projects that will be key for future development, such as making its business processes digital.

It also said that ebitda will rise sharply for the rest of the year even though turnover will fall.

The company has over a thousand owned and franchised stores plus thousands of concessions and availability in over 7,000 multibrand stores in 35 countries.