Ludwig Beck am Rathauseck-Textilhaus Feldmeier AG

Annual Report • Mar 23, 2004

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Corporate | 23 March 2004 15:44

Turnover slightly down, but LUDWIG BECK holds its own in a shrinking market.

Corporate-news announcement sent by DGAP. The sender is solely responsible for the contents of this announcement. ——————————————————————————– Ludwig Beck AG: Turnover slightly down, but LUDWIG BECK holds its own in a shrinking market. Presentation of the consolidated financial statement for fiscal 2003 (in line with IFRS/IAS). Munich, 23 March 2004. With a slight downturn in turnover the LUDWIG BECK Group (ISIN DE0005199905) held its own in a market that has already been shrinking for some years, and in doing so finished the year with figures that were better than the trade average. At EUR 93.1 million, gross sales at Group level were 2.1% down on the previous year’s figure of EUR 95.1 million for the same period. In spite of measures taken at an early stage across the entire cost spectrum it did not prove possible to avoid deterioration of results, and the Group’s operating result (EBIT) dropped from last year’s EUR 3.1 million to a level of EUR 1.9 million. This situation was a result of the sustained negative sales curve and the in some cases exaggerated discount campaigns prevailing in the trade and which Ludwig Beck too was unable to steer clear of. Germanys retail trade closed a further disappointing year with sales down by over 1%. With a minus of no less than 5%, business in the textile trade was significantly worse. The past twelve months have seen the German economy slipping into recession for the second time since the countrys reunification, with private consumption falling by a further 0.2% (as against last years 0.5%) while the savings rate grew yet again to 10.8% (last year: 10.6%). Virtually all areas of activity in the Ludwig Beck Group were hit by the drop in turnover. An exception in this respect was the restructured in-trend -Hautnah- wellness and beauty department which, having reopened in 2002, continued its positive trend by increasing its sales by over 20%. Also showing positive development was the Groups newly created fashion outlet division. Besides the already established Parsdorf operation, two further outlets were opened in the federal state of Baden-Württemberg. At these locations, surplus stocks, but above all attractive off-the-line items are sold quickly and with a positive effect on net income. Ludwig Beck Vertriebs GmbH continued the planned expansion of its branch network, and 2003 saw two new stores opening in the Forum Allgäu shopping centre in Kempten. Overall, Ludwig Beck Vertriebs GmbH contributed EUR 7.8 million (last year: EUR 4.6 million) to Group turnover. At Group level an operating result (EBIT) of EUR 1.9 million was achieved as against last years figure of EUR 3.1 million. The consolidated annual deficit amounts to EUR 0.9 million in contrast to last years consolidated surplus of EUR 0.4 million. In the face of the anticipated unsatisfactory profit situation caused by sustained negative sales trends, Ludwig Beck AG responded at an early stage with cost-cutting measures. Personnel costs were reduced by EUR 1.3 million from last years level of EUR 19.2 million to EUR 17.9 million. LUDWIG BWECK set an example by raising the weekly working time to 40 hours without full compensatory wage adjustment, and senior staff and the Management Board’s members waived pay components. The number of staff fell to 539 (last year: 563) as at the cut-off date. In spite of the unsatisfactory results trend experienced during the past two years, LUDWIG BECK still boasts an excellent financial structure with an equity ratio – including minority interests – of 37.9% as against last year’s level of 39.1%. This year is again seeing Germanys textile retail sector facing difficult challenges. The economic environment has not yet shown any signs of brightening up, nor has the brought-forward tax reform produced more than a weak degree of stimulus to date. The German government anticipates GDP to rise by rates of between 1.5 and 2.0% in real terms, with these quite positive forecasts receiving support from the improved results on the export front. Experts are unanimous in their view that a perceptibly positive trend will not manifest itself until the second half of 2004. However, the biggest task facing the retail trade will lie in finding a way back to a realistic price trend in the interests of stopping the downward movement of margins. Its three distribution channels give Ludwig Beck a sound basis for the future. Against the background of its wide range of product assortment concepts and traditional strengths, the Group will continue to meet the core needs and requirements of its customers, namely a pleasant shopping experience, high product quality, superior service, and expert and friendly advice. The Emporium of the senses concept as unique feature will be further built upon by way of emotionally charged campaigns but also through continuous substantiation of the value-for-money factor. All employees have and will continue to be geared to the new, demanding customer requirements by means of a comprehensive training and qualification scheme. Besides the flagship store at the Marienplatz location in Munich, there will be continuous expansion of the branch network, Ludwig Beck Vertriebs GmbH and Ludwig Beck AG activities as well. One example in this direction was the highly successful opening on 10 March of three new branch stores in the Riem-Arcaden shopping centre in Munich. In addition, those segments developing at an above-average rate are to be strengthened while areas of activity that Ludwig Beck can operate virtually without competition will be subject to further expansion. At Group level, LUDWIG BECK anticipates a pronounced increase in turnover and a significant improvement in the profit situation. Contact: Jens Schott Tel.: +4989/23691 798 FAX: +4989/23691 600 Key-Figures EUR million – IFRS/IAS 2003 2002 sales (gross) 93,1 95,1 sales 80,3 82,0 EBIT 1,9 3,1 Consolidated net income -0,9 0,4 Employees 539 563 sales area qm 19.910 17.080 end of message, (c)DGAP 23.03.2004 ——————————————————————————– WKN: 519990; ISIN: DE0005199905; Index: Listed: Amtlicher Markt in Frankfurt (Prime Standard) und München; Freiverkehr in Berlin-Bremen, Düsseldorf, Hamburg und Stuttgart 231544 Mär 04