Wolford AG — Earnings Release 2008

Jul 24, 2009

News Details

Ad-hoc | 24 July 2009 08:15

Wolford AG: Pressemitteilung Ergebnis Geschäftsjahr 2008/09 – Press release sales and earnings for the 2008/09 fiscal year

Wolford AG / Final Results

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Press Information

Sales and earnings in the 2008/09 fiscal year

Wolford Group: Sales and earnings impacted by difficult market environment

• Perceptible consumer restraint, particularly for luxury goods

• Sales of EUR 147.3 million continue at a high level

• Operating profit declines to EUR 2.2 million

• Focus on efficiency-enhancing measures

Vienna/Bregenz, July 24, 2009

'A major portion of the 2008/09 fiscal year was characterized by a
difficult economic environment, particularly in the luxury goods industry,
which naturally had negative effects on the sales and earnings development
of the Wolford Group. However, we assume that the crisis is only of a
temporary nature. Accordingly, we will resolutely maintain our focus on the
cornerstones of our business strategy, enabling us to prepare now for
future growth. Moreover, we will intensify our efforts to implement
efficiency-enhancing measures in order to sustainably improve the earnings
situation of the company', says Holger Dahmen, Chief Executive Officer of
Wolford Aktiengesellschaft, in commenting on the development of the Wolford
Group in the 2008/09 fiscal year.

Sales and earnings decline based on the strong previous year's performance

Against the backdrop of the ongoing restraint in consumer demand, total
sales of the Wolford Group in the 2008/09 fiscal year (May 1, 2008 to April
30, 2009) decreased by 6.5 percent, to EUR 147.3 million. Adjusted for
currency effects, sales were down 5.3 percent in 2008/09. This decline is
based on an extraordinarily strong performance in the 2007/08 fiscal year,
which in turn had raised sales of the Wolford Group by 11.3 percent
compared to the year before, to EUR 157.7 million. Nevertheless, total
sales in the reporting period 2008/09 were still 4.0 percent above the
figure for the 2006/07 fiscal year. On balance, Wolford has increased sales
by 26.7 percent over the last four fiscal years.

Similar to the development of sales, the Wolford Group was also confronted
with a decline in its relevant earnings indicators in the 2008/09 fiscal
year. In this regard, EBIT (operating profit), which had climbed 47.5
percent in the record 2007/08 fiscal year, fell to EUR 2.2 million in
2008/09 (2007/08: EUR 11.3 million). EBITDA decreased to EUR 9.6 million
(2007/08: EUR 18.2 million). The EBITDA margin (EBITDA in relation to
sales) amounted to 6.5 percent, down from 11.5 percent in the previous
year.

The result from continuing operations was down to EUR -0.8 million
(2007/08: EUR 9.3 million). In contrast, the net cash from operating
activities could be raised by 22.8 percent to EUR 7.5 million (2007/08: EUR
6.1 million).

Increased investments lay the groundwork for future growth

As at the balance sheet date of April 30, 2009, shareholders' equity of the
Wolford Group totaled EUR 76.8 million (April 30, 2008: EUR 79.0 million).
This corresponds to an equity ratio of 49.6 percent. The solid asset and
capital structure of the Wolford Group enabled the company to further
intensify its investments in the expansion and optimization of monobrand
distribution. In addition, Wolford increasingly invested in enterprise
resource planning (ERP) and development systems designed to optimize
processes and capacities and thus sustainably improve the earnings
situation of the Group. During the period under review, capital investments
(excluding financial assets) amounted to EUR 14.7 million, a rise of 54.0
percent from the previous year's level (2007/08: EUR 9.6 million).

Slight sales growth at Wolford's proprietary stores attributable to the
expansion of the distribution network

The Retail segment achieved a slight increase in sales of 1.4 percent in
the 2008/09 fiscal year, which can be attributed to the strategic expansion
of Wolford's own sales outlets (boutiques, concession shop-in-shops and
factory outlets). However, Wolford's proprietary stores were not immune to
the negative effects of the ongoing difficult market environment, with
sales down 9.9 percent on a like-for-like basis in the same period.
Wolford's Wholesale segment (business with sales partners), which accounted
for 57.7 percent of total Group sales, posted a 10.6 percent decline in
2008/09. Accordingly, the share of total sales generated by Wolford's
proprietary stores once again increased, to 42.3 percent (2007/08: 39.3
percent).

Considering the sales development of the individual distribution channels,
the boutiques, which accounted for 46.0 percent of total sales in 2008/09,
could not continue the positive trend of previous years. All in all, sales
at the 228 Wolford boutiques, of which 103 were Wolford-owned and 125
partner-operated, declined by 5.4 percent in the 2008/09 fiscal year. This
decrease is almost entirely related to Wolford's lower sales with its
partner-operated boutiques, which fell by 15.5 percent. In contrast, sales
at Wolford's own boutiques were down only slightly, by 0.4 percent. Whereas
the other distribution channels, i.e. department stores, multi-brand
retailers and private labels, posted a drop in sales, the development of
business at factory outlets was gratifying, featuring a 9.8 percent rise in
sales.

The sales share generated by Wolford's controlled distribution climbed as a
result of the continuous expansion of monobrand distribution. Hence,
Wolford's boutiques (proprietary and partner-operated), factory outlets and
concession shop-in-shops generated 56.2 percent of total sales (2007/08:
55.2 percent).

199 sales outlets embody Wolford's premium look

Wolford also pushed ahead with the roll-out of its store concept in the
period under review as part of its ongoing efforts to optimize distribution
quality. In the past fiscal year, a total of 28 Wolford-owned and 25
partner-operated outlets, for example in Geneva (CH), Paris (F) and Atlanta
(USA), were opened or refitted to display the new premium look. As per
April 30, 2009, a total of 199 sales outlets (87 proprietary and 112
partner-operated) embodied the modern and light look of the Wolford store
concept. In addition to the optimization of sales locations, the
country-specific online shops which comprise Wolford's virtual world of
luxury shopping have been redesigned and relaunched. Starting in August
2009, the new online boutique will not only be available in Germany, but
online shops will also shine in new splendor in Austria, France and the
Netherlands. Further online shops will gradually be rolled out in other
markets.

Development in Wolford's core geographic markets

Following a predominantly positive development in most of Wolford's core
geographic markets in the first half-year 2008/09, the ongoing restraint in
consumer spending in the second half of the fiscal year was noticeable in
almost all markets. Spain (-19.0 percent), USA (-16.0 percent in Group
currency, -16.6 percent in USD) and Italy (-15.0 percent) were particularly
negatively impacted in a year-on-year comparison. In addition, the
Scandinavian markets (-11.6 percent), the Central and Eastern European
region (-10.3 percent) as well as the Netherlands (-9.8 percent) were also
confronted with a sharp decline in sales. Sales in Austria and Germany
declined moderately by 2.1 percent and 4.1 percent respectively, on the
basis of pronouncedly high sales levels achieved in the previous year. In
contrast, parts of Western Europe defied the economic downswing, with sales
rising in Switzerland (+9.9 percent in Group currency, +4.3 percent in
CHF), France (+4.9 percent), Great Britain (+10.8 percent in GBP, -5.8
percent in Group currency) and Belgium (+18.6 percent). In the face of a
challenging business environment, Wolford also succeeded in increasing
sales by 5.3 percent in the promising growth markets of Asia and Oceania,
following a 39.2 percent rise in sales in the previous fiscal year.

Wolford Legwear showed itself to be 'crisis resistant'

The Legwear product group increased its share of sales in the 2008/09
fiscal year, generating 50.7 percent of total brand sales. The
Ready-to-wear range comprised 37.0 percent of brand sales, and the Lingerie
product group 9.9 percent. The Swimwear and Accessories product groups,
which round off Wolford's product portfolio, generated 2.4 percent of total
brand sales together.

Wolford in the future

The Wolford Group will continue to resolutely focus on its strategic
cornerstones, i.e. the concentration on its core competencies and core
business areas, as well as the strategic expansion of monobrand
distribution. At the same time, Wolford will intensify its efforts to
enhance efficiency and optimize the cost structure.

The Executive Board of Wolford Aktiengesellschaft expects a continuing
difficult market environment throughout the current 2009/10 fiscal year.
Accordingly, it has initiated measures designed to face the prevailing
global business environment and establish a solid framework for meeting the
challenges of the future. From today's point of view, the Executive Board
anticipates moderate growth once again in the 2010/11 fiscal year.

Overview of sales and financial data for the 2008/09 fiscal year

(May 1, 2008 to April 30, 2009)

                                         2008/09   2007/08      Change
                                                             absolute /

in '000 % points
Sales 147,343 157,653 (10,310)
EBITDA 9,591 18,159 (8,568)
EBITDA margin 6.5% 11.5% (5.0)
EBIT (operating profit) 2,184 11,339 (9,155)
EBIT margin 1.5% 7.2% (5.7)
Result from continuing operations (810) 9,265 (10,075)
Net result for the period (1,198) 7,173 (8,371)
Net cash from operating activities 7,455 6,070 1,385
Capital investments excluding financial 14,719 9,557 5,162
assets
Gearing ratio 44.1% 28.6% 15.5
Shareholders' equity 76,818 79,018 (2,200)
Equity-to-assets ratio 49.6% 50.9% (1.3)
Earnings per share in EUR (0.24) 1.46 (1.70)
Number of full-time equivalents at period 1,541 1,706 (165)
end

The Annual Report 2008/09 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 Aktiengesellschaft, Wolfordstraße 1, A-6901 Bregenz
+43 (0) 5574 690-0
www.wolford.com

24.07.2009 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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