Charles Voegele Holding AG: 2015 FINANCIAL STATEMENTS
OREANDA-NEWS. Charles Vögele once again had to operate in a very difficult market environment in 2015, negotiating tough economic conditions and a difficult currency situation. Charles Vögele’s net sales fell -2.5% in the 2015 financial year after adjusting for exchange rates and floorspace (like-for-like). Net sales decreased by -11% overall to CHF 803 million (2014: CHF 901 million). The main reasons for this decline were negative currency effects, intense competition and price pressure in Switzerland, and an exceptionally warm autumn. By taking immediate action on procurement, making additional cost savings and improving the collection and the stores, Charles Vögele recovered from this setback and managed to increase sales (like-for-like) in the third quarter. Then the positive trend reversed again in the fourth quarter because of the exceptionally warm autumn in all of Charles Vögele’s Sales Regions.
Despite the decline in sales, the company further improved its inventory structure and now has record low inventories. On the costs side, it helped that the euro was weaker than in the same period of the previous year. Operating costs fell by CHF -37 million to CHF 526 million as a result of currency influences. However, this was not sufficient to compensate for currency losses on sales. Operating earnings at the EBITDA level decreased to CHF -9 million (2014: CHF 41 million) and EBIT to CHF -51 million (2014: CHF 2 million). The consolidated loss increased as a result to CHF -62 million (2014: CHF -11 million).
Germany performs slightly better than the market, Hungary posts another positive result
The Germany, CEE (Austria, Slovenia, Hungary) and Benelux Sales Regions reported a stable sales performance in local currency terms last year. With a decline of -0.3%, Charles Vögele Germany performed slightly better than the market as a whole. Thanks mainly to exceptionally good sales in the summer, the trend was positive in the first nine months, but this was neutralized by a decline in the final quarter of the year. The markets had to tackle the challenge of weak economic conditions and unusually warm temperatures lasting deep into autumn. Hungary performed pleasingly, significantly improving its sales and earnings for the second year in a row.
New store format strategy has an effect
Despite the fall in sales from existing floorspace, significant progress was made in transforming the company last year. The main improvements were in core areas: range focus, merchandise management and implementing the store format strategy. The new branch design concept improves the way customers are guided through the stores, while the inspiring presentation of the clothes makes for a better shopping experience. By the end of 2015, 274 out of a total of 761 stores had been successfully converted and reconfigured. Customers responded positively to the clearly visible, modernized look of the Charles Vögele brand.
Monthly product highlights and relaunch of the Online Shop
Another main focus for the company’s management last year was the development of the Fast-Track collection. Under the slogan “Create Yourself” Charles Vögele is offering a new programme every month with the aim of responding as quickly as possible to market trends. Together with the updated look of the Online Shop, customers can now enjoy an inspiring shopping experience through all sales channels. The new Online Shop, which went live in August 2015, represents an important step forward in the company’s OmniChannel strategy.
Outlook 2016: Secure financing, powerful transformation program
The modernized spring collection 2016 was well received and makes us confident about the current financial year. In addition, bank loans worth CHF 245 million that were due to expire in April have been extended, which secures the funding base for the company and allows it to continue working hard on the turnaround measures it has started.
There is no doubt that 2016 will be another challenging year. The stubbornly low level of sales and the ongoing shake-out of the clothing market make structural cost adjustments inevitable. This is why the company’s management has launched the “CVision” transformation programme. Charles Vögele is in a good position to tackle the challenges it faces this year. For the current financial year the company expects a positive operating result at EBITDA level and a positive operating results at EBIT level in 2018. More precise guidance concerning the actual financial year will be communicated on the occasion of the publication of the half-year figures 2016 in August.
Charles Vögele Holding AG’s Annual General Meeting
The Board of Directors of Charles Vögele Holding AG is proposing that shareholders at the AGM on 18 May 2016 elect Christophe Spadone (1967). Mr Spadone’s family is the beneficial owner of Elarof Trust whose trustee is Aspen Trust. For over a year, Elarof has been the main entity of a shareholders group with more than 15% shares in Charles Vögele. In February 2016, the group has been terminated but Elarof remained with its existing position. Christophe Spadone is an entrepreneurial investor with more than 15 years of experience within financial markets who believes in the long-term success of Charles Vögele. Meinrad Fleischmann, who took over the position of Chief Sales Officer (CSO) at Charles Vögele on an interim basis in November 2015, has decided not to stand for re-election at the 2016 Annual Shareholders’ Meeting as the board of directors confirmed him in his position as CSO.