Wolford AG — Earnings Release 2008

Jul 25, 2008

News Details

Ad-hoc | 25 July 2008 08:30

Wolford AG: Sales and earnings for the 2007/08 fiscal year

Wolford AG / Final Results

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Press release

Sales and earnings for the 2007/08 fiscal year

Wolford posts record sales and significant improvement in earnings

• Sales up 11.3 percent to the record level of EUR 157.7 million

• Disproportionately high earnings increase (EBIT) of 47.5 percent, to
  EUR 11.3 million

• Sales growth in all major product groups, markets and strategic
  distribution channels

• Wolford boutiques boost sales by 15.9 percent

Vienna/Bregenz, July 25, 2008

'With record sales of EUR 157.7 million and a disproportionately high EBIT
increase, we have once again successfully continued our growth path in the
past fiscal year', says Holger Dahmen, CEO of Wolford AG in positively
reviewing the company’s performance in 2007/08. 'Thus we have achieved an
ongoing improvement in profitability while posting average annual sales
growth of 10.7 percent over the last three fiscal years. This success is
the result of a series of measures, in particular the optimization of the
product portfolio and our visual brand identity, as well as the extension
of monobrand distribution', Dahmen adds in explaining the factors
underlying Wolford’s success.

Record sales accompanied by improved profitability

In the 2007/08 fiscal year (May 1, 2007 – April 30, 2008), the Wolford
Group increased sales in all major distribution channels and strategically
important markets, with total sales rising 11.3 percent to EUR 157.7
million, the highest level in the company’s history. Accordingly, the
company generated an average annual sales growth of 10.7 percent during the
last three fiscal years. All relevant earnings indicators and thus the
profitability of the Austrian luxury brand Wolford developed even more
impressively. EBITDA rose by 31.2 percent to EUR 18.2 million, up from EUR
13.8 million, whereas the operating profit (EBIT) even climbed by 47.5
percent, to EUR 11.3 million (previous year: EUR 7.7 million) in the same
period. Accordingly, the EBITDA margin improved by 1.7 percentage points in
the 2007/08 fiscal year, to 11.5 percent, and the EBIT margin amounted to
7.2 percent of total sales, an increase of 1.8 percentage points compared
to the previous fiscal year.

The Wolford Group also significantly improved its profit from continuing
operations during the past fiscal year, which could be increased by 52.7
percent, to EUR 9.3 million (previous year: EUR 6.1 million). The net
profit for the year improved to EUR 7.2 million.

Sound equity capital base

At the balance sheet date of April 30, 2008, shareholders’ equity of the
Wolford Group was EUR 79.0 million. This corresponds to an increase of 6.1
percent, or EUR 4.6 million, compared to the previous year’s reporting date
of April 30, 2007. This brought the equity ratio to an impressive level of
50.9 percent of total assets. Net debt rose from EUR 17.5 million to EUR
22.6 million, which is chiefly related to the financial resources tied up
in the increased inventories of finished goods and merchandise. On the
balance sheet date, gearing was 28.6 percent, above the previous year’s
level of 23.5 percent.

Significant sales growth in all major product groups

In the 2007/08 fiscal year, the Wolford Group generated higher sales with
its five product segments - Legwear, Ready-to-wear, Lingerie, Swimwear and
Accessories - achieving significant increases in most cases. This
particularly applies to the Ready-to-wear product group (women’s
outerwear), whose brand sales rose 14.8 percent. 'This product group made
the largest contribution to sales growth in absolute terms, and emerged as
a growth driver, as expected', said CEO Holger Dahmen, commenting on the
positive development of this product segment. Legwear, which has served as
Wolford’s core business for close to 60 years, expanded once again,
surpassing the very good results achieved in the previous fiscal year. The
Lingerie and Accessories product lines also posted significant sales
growth.

On balance, Legwear generated 48.8 percent of brand sales, the largest
proportion in the Wolford Group, followed by Ready-to-wear, accounting for
38.7 percent, Lingerie with 9.9 percent, Swimwear with 1.4 percent, and the
Accessories product group, which contributed 1.2 percent of total brand
sales.

Expansion of monobrand distribution

In the period under review, the Wolford Group successfully implemented its
strategy of focusing on a qualitative improvement of its distribution
activities. In the 2007/08 fiscal year, Wolford generated 39.3 percent of
total sales through its own retail locations, compared to only 27.9 percent
three years earlier. On balance, Wolford’s proprietary stores – boutiques,
shop-in-shops and factory outlets – achieved a 16.8 percent expansion of
sales compared to the previous year, or an improvement of 6.4 percent on a
like-for-like basis. Growth was once again driven by boutiques. In
particular, Wolford-owned boutiques developed extremely positively in the
reporting period, registering sales growth of 17.1 percent. Wolford’s sales
with partner-operated boutiques also developed favorably, showing growth of
13.5 percent.

In the 2007/08 fiscal year, sales by the Wolford Group’s controlled
distribution, i.e. all Wolford-owned stores and partner-operated boutiques,
already accounted for 55.2 percent of total sales.

Boutiques made the largest contribution to Group sales among all
distribution channels, with a share of 46.3 percent, whereas department
stores generated 21.2 percent of sales and multi-brand retailers 23.2
percent. Factory outlets contributed 6.6 percent of sales and private label
had a 2.7 percent share.

146 Wolford outlets already display new look

In the 2007/08 fiscal year, Wolford pressed ahead quickly with the roll-out
of its new store concept. 54 sales locations were newly opened or
redesigned in 2007/08 alone. As per April 30, 2008, a total of 146 outlets
had already been redesigned to reflect the updated, attractive and
distinctive design. The new store concept featuring an appealing shopping
atmosphere has made a considerable contribution to the extremely good
development of the monobrand business.

Significant growth in all geographic markets

As a consequence of its intensified and controlled growth strategy, the
Wolford Group succeeded in increasing sales in all main geographic markets
during the 2007/08 fiscal year. Wolford’s traditionally largest three
markets once again surpassed the very high sales level posted in 2006/07,
with sales up 8.6 percent in Austria, 4.1 percent in Germany and 3.5
percent in the USA (14.3 percent in the local currency). In particular, the
newer markets for Wolford products registered notably dynamic sales growth.
Sales in the Central and Eastern European markets were up 32.8 percent,
whereas the company even enjoyed sales growth of 39.2 percent in Asia and
Oceania. The Wolford brand and its product portfolio performed well in the
established European markets, achieving growth rates of 21.9 percent in the
Netherlands, 19.8 percent in the UK (25.4 percent in the local currency),
17.8 percent in the Scandinavian markets, 11.3 percent in Italy, 9.7
percent in Spain, 8.9 percent in France, and 5.2 percent in Switzerland
(8.4 percent in the local currency).

Outlook

'We will continue to focus on achieving our strategic targets in the
future, i.e. the optimization of our product portfolio and the qualitative
expansion of our controlled distribution, and thus the systematic
enhancement of the Wolford brand and its sustainable positioning in the
luxury segment', CEO Dahmen concluded in elaborating on Wolford’s plans for
the present fiscal year. Against this backdrop, the management of the
Wolford Group is optimistic that the positive development of sales and
earnings will continue in the 2008/09 fiscal year.

Overview of sales and financial data for the 2007/08 fiscal year

in EUR ‘000 2007/ 2006/ Change Change
08 07
(absolute in %
/
in %
points)
Sales 157,6 141,6 15,970 11.3%
53 83
EBITDA 18,159 13,844 4,315 31.2%
EBITDA margin 11.5% 9.8% 1.7
EBIT (operating profit) 11,339 7,686 3,653 47.5%
EBIT margin 7.2% 5.4% 1.8
Profit from continuing operations before 9,265 6,067 3,198 52.7%
taxes
Net profit for the year 7,173 6,442 731 11.3%
Profit from continuing operations before 16,085 12,225 3,860 31.6%
taxes and DA&Im¹
Net cash from operating activities 3,812 6,978 (3,166) -45.4%
Net debt 22,593 17,492 5,101 29.2%
Debt/equity ratio 28.6% 23.5% 5.1
Shareholders’ equity 79,018 74,442 4,576 6.1%
Equity-to-assets ratio 50.9% 53.0% (2.1)
Earnings per share in EUR 1.46 1.34 0.12 9.0%

¹ DA&Im = Depreciation, amortization and impairment

The Annual Report 2007/08 is also available on the Internet at
www.wolford.com under Investor Relations.

Contacts: Holger Dahmen, Chief Executive Officer
Peter Simma, Deputy Chief Executive Officer
Investor@wolford.com
Wolford AG, Wolfordstraße 1, A-6901 Bregenz
+43 (0) 5574 690-0
www.wolford.com

25.07.2008 Financial News transmitted by DGAP

Language: English
Issuer: Wolford AG
Wolfordstraße 1
6901 Bregenz
Österreich
Phone: +43/5574/6907434
Fax: +43/5574/6907440
E-mail: investor@wolford.com
Internet: www.wolford.com
ISIN: AT0000834007
WKN: 83400
Indices: ATX
Listed: Freiverkehr in Berlin, München, Stuttgart; Open Market in
Frankfurt; Foreign Exchange(s) Wien

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