Wolford AG — Earnings Release 2010

Dec 17, 2010

News Details

Ad-hoc | 17 December 2010 07:55

Wolford AG: Sales and earnings in the first half of the 2010/11 fiscal year

Wolford AG / Key word(s): Half Year Results

17.12.2010 07:55

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Press information
Sales and earnings in the first half of the 2010/11 fiscal year

Wolford achieves sales growth and significant earnings increase

• Sales up 8.1 percent to EUR 74.0 million

• Gratifying performance of retail stores

• Net profit for the period more than doubled

• Further optimization of the asset and capital structure

Vienna/Bregenz, December 17, 2010

In the first half of the 2010/11 fiscal year (May 1, 2010 - October 31,
2010), the Wolford Group succeeded in further raising total sales from the
previous year's period and achieving disproportionately high increases in
its earnings indicators. Whereas sales of the international fashion company
climbed 8.1 percent above the prior-year level, the result from continuing
operations was almost doubled. 'The positive sales trend of previous
quarters has continued. Our retail business developed particularly
gratifyingly, serving as the main growth driver of the Group in the first
half-year. This shows that strategic orientation focusing on expanding
monobrand outlets together with the persistent improvement of distribution
quality has clearly been and still is the right path to take', comments
Holger Dahmen, Chief Executive Officer of Wolford Aktiengesellschaft. 'The
positive earnings development shows that we have emerged strengthened from
this economically challenging period. At the beginning of the economic
crisis, we reacted timely and flexibly and continue to strongly concentrate
on consistently implementing cost reduction and efficiency-enhancement
measures. As a result, we can report a considerable improvement in
operating earnings indicators in the reporting period', Holger Dahmen
concludes.

Further upturn in sales and significant improvement of all relevant
earnings indicators
On balance, total sales of the Wolford Group rose 8.1 percent in the first
half of the 2010/11 fiscal year, amounting to EUR 74.0 million (H1 2009/10:
EUR 68.5 million). This development can primarily be attributed to the
gratifying performance of Wolford's proprietary stores, which raised sales
by 16.1 percent in the first half of the current fiscal year.

The positive development of key earnings indicators was even more
pronounced in the reporting period, posting disproportionate growth
compared to the rise in sales. Accordingly, EBITDA of the Wolford Group
amounted to EUR 7.1 million, an increase of 20.3 percent from the level of
EUR 5.9 million in the first half of 2009/10. The corresponding EBITDA
margin improved from 8.7 to 9.6 percent. The increase in the operating
profit (EBIT) was even more impressive, climbing by 55.8 percent to EUR 3.2
million, up from EUR 2.1 million in the first six months of the previous
year. The gratifying development in the operating earnings indicators is
the result of the ongoing persistent implementation of cost reduction and
efficiency-enhancement measures.

Against this backdrop, the Wolford Group came close to doubling the result
from continuing operations, which totaled EUR 2.5 million in the reporting
period (H1 2009/10: EUR 1.3 million). The profit for the period rose to EUR
1.9 million compared to EUR 0.8 million in the first half of the previous
year, an improvement of 152.8 percent. Earnings per share were EUR 0.39 (H1
2009/10: EUR 0.15).

Reduction of net debt and higher equity ratio
In the first half of the current fiscal year, Wolford continued its efforts
to optimize financial resources tied up in working capital. An efficient
inventory management reduced inventories by EUR 5.7 million from the level
at the reporting date for the first half of the 2009/10 fiscal year. At the
same time, the Wolford Group succeeded in reducing liabilities to banks,
which in turn resulted in a significant reduction of net debt to EUR 23.5
million at present, down from EUR 37.7 million at the end of previous
year's reporting period.The gearing ratio fell from 48.6 to 29.1 percent.
The equity ratio as at October 31, 2010 improved to 52.5 percent (October
31, 2009: 48.2 percent). On an absolute basis, shareholders' equity rose
from EUR 77.4 million at the half-year 2009/10 reporting date to the
current level of EUR 81.0 million as at October 31, 2010.

Almost all of Wolford's core geographic markets on a growth path
Most of Wolford's core geographic markets generated double-digit growth
rates in sales in the reporting period. In particular, the promising future
market of Asia/Oceania once again achieved a significant expansion of
sales, which rose 37.0 percent in the first half-year 2010/11. Considerable
growth was also posted in the USA (+24.3 percent), Switzerland (+18.6
percent) and Great Britain (+17.9 percent). The market in Spain and Belgium
achieved a sales increase of about 15 percent, compared to approximately 12
percent in Italy and Scandinavia. Whereas Germany (+5.4 percent) also
boosted sales and Central and Eastern Europe matched the previous year's
figures, declining sales were reported in Austria (-0.3 percent), the
Netherlands (-3.4 percent) and France (-3.5 percent).

Retail locations propel growth
Sales in Wolford's proprietary stores (boutiques, shop-in-shops and factory
outlets) as well as with distribution partners both increased in the first
six months of the 2010/11 fiscal year, with retail outlets generating a
much higher sales increase of 16.1 percent. In part, this was due to
expanded distribution of Wolford-owned locations. On a like-for-like basis,
sales were up 7.7 percent. As a consequence, the retail segment increased
its share of total Group sales to 47.4 percent (H1 2009/10: 44.3 percent).

Considering the sales development of the individual distribution channels
in greater detail, Wolford's own boutiques developed particularly
positively (+14.2 percent). Due to the fact that sales with
partner-operated boutiques also improved by 4.2 percent, the most important
distribution channel 'boutiques', which accounted for 46.0 percent of sales
in the reporting period, generated an overall sales growth of 11.4 percent.
As at the reporting date of October 31, 2010, Wolford distributed its
products via a network of 217 boutiques (105 owned by Wolford and 112
operated by partners). The business with department stores (+12.4 percent)
also developed particularly gratifyingly in the first half of the 2010/11
fiscal year, which is mainly related to growth at Wolford's own concession
shop-in-shops. Taking account of the nine additional concession
shop-in-shops opened in Spain by the end of October 2010, this category
achieved a 53.1 percent jump in sales during the reporting period. Whereas
sales at factory outlets were up 10.4 percent, business with multi-brand
retailers remained stable at the prior-year level. Wolford's online
business further gained in importance in the reporting period, with
e-commerce sales rising 60.2 percent on a like-for-like basis compared to
the previous year.

Based on the good performance of Wolford's controlled distribution channels
(own and partner-operated boutiques, factory outlets and concession
shop-in-shops), the sales share of monobrand distribution was up to 59.1
percent (H1 2009/10: 56.7 percent) in the reporting period.

Outlook

The financial results of the Wolford Group developed positively as expected
in the first half of the 2010/11 fiscal year, due to the gratifying sales
growth as well as the rigorous implementation of cost reduction and
efficiency-enhancement measures. For this reason, Wolford will continue to
strongly concentrate on both of these aspects. With respect to marketing,
the market launch of new products and the already-planned measures to
expand market penetration should further contribute to increasing demand.
The focus of expanded sales activities will be on the Asian region (in
particular China), which reported gratifying growth rates in the reporting
period. Corresponding measures were already initiated at the end of the
first half of 2010/11 to more intensively cultivate this region's markets,
which should show perceptible results in the next two to three years.

Compared to the previous 2009/10 fiscal year, the Executive Board expects a
rise in sales as well as a further improvement in earnings for the 2010/11
fiscal year as a whole.

Overview of sales and financial data for the first half of the 2010/11
fiscal year
(May 1, 2010 - October 31, 2010)

in EUR '000 H1 H1 Changeab- Changein
2010/11 2009/10 solute percent
Sales 74,025 68,471 5,554 8.1 %
EBITDA 7,141 5,934 1,207 20.3 %
EBIT 3,205 2,057 1,148 55.8 %
Result from continuing 2,467 1,287 1,180 91.6 %
operations
Net profit/loss for the period 1,910 755 1,155 152.8 %
Net profit/loss per share in 0.39 0.15 0.24 152.8 %
EUR
Gross cash flow* 6,349 4,649 1,700 36.6 %
Capital investments excluding 2,832 4,583 -1,751 -38.2 %
financial assets
Shareholders' equity 80,963 77,437 3,526 4.6 %
Equity-to-assets ratio 52.5 % 48.2 % 4.3
Net debt 23,533 37,659 -14,126 -37.5 %
Gearing ratio in % 29.1 % 48.6 % -19.5
Average number of full-time
equivalents 1,501 1,499 2 0.1 %
Number of full-time
equivalents
at period end 1,554 1,496 58 3.9 %

*Gross cash flow Net profit/loss for the period
=
+/- Depreciation, amortization, impairment losses/
reversals of impairment
losses on intangible assets and property, plant and
equipment
-/+ Gains/losses on the disposal of property, plant and
equipment
+/- Change in non-current provisions

The Half-year Financial Report 2010/11 is 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

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Language: English
Company: 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; Wien (Amtlicher Handel / Official Market)

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