Tom Tailor still has it tough, wholesale up but Bonita struggles
today Nov 13, 2018
Tom Tailor, the German brand that’s also a major name across many European markets, reported its Q3 results on Tuesday and it seems that the firm’s bounce-back isn’t quite happening yet.
Its group revenues dropped 3.2% in Q3 to €214.3m, although it stressed that against a German total market down as much as 6%, that wasn’t a bad result.
Bad it may not have been, but it wasn’t good either and it all resulted in group net income swinging to a loss of €0.3m after a profit of €7.4m a year ago.
It seems that it was those German problems that pulled down its overall performance. CEO Dr Heiko Schäfer talked of “unfavourable market conditions” and said that the domestic market’s very promotional focus during the latest period (especially due to the long hot summer but also since August), clearly dented its ability to sell goods at full price.
The core Tom Tailor brand still managed to see sales rising 1.9% to €163.6m, and its wholesale ops were even more buoyant with a revenues increase of 7.3% €97.6m with success in Russia, Russian, the Nordic and Baltic countries, Greece and Spain. But core brand earnings on an ebitda basis dipped marginally to €19.3m from €19.6m a year ago.
Dr Schäfer said he was “pleased with the development of the Tom Tailor brand," but he couldn’t say the same about the Bonita label. Its sales fell 16.7% to €50.7m and the gross profit margin fell sharply 63% from 69.9% a year ago, “due to strong focus on the adjustment of the inventory.” Bonita reported that ebitda fell to a loss of €9.3m from +€2.4m a year ago.
The company now expects a return to profitability for this label to take longer than expected and is now focused on stabilising the business, which suggests that things are very tough at Bonita.
The CEO said that for Q4, the company has worked out a strategy to drive sales higher and “address crucial aspects” in the short term.
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