PRESS RELEASE Maastricht-Airport, the Netherlands, 20 January, 2015
Q4 2014 TRADING UPDATE Sales growth in Fashion continues both off- and online in weak shoe market, but at lower pace (+ 2.0%) than in first three quarters (+ 7.6%); margin and result Fashion under pressure
Q4 update: - Very difficult shoe markets due to warm autumn weather. Decrease of Dutch shoe market with 4.5% in October/November. - Fashion NL strengthened its position in a declining market and increased its market share like in the previous three quarters. - Fashion total realises € 3.6 million higher sales (+ 2.0%) in Q4 (offline: – 0.2%; online + 25.7%). - Underlying1 operational EBIT Fashion in Q4 positive but around € 6 million lower than in Q4 2013 due to weak months October and November. December result better than in 2013. - Positive sales and result trend Kwantum continues in Q4. Disposal process started in Q1 2015
Update 2014: - Underlying1 operational EBIT Macintosh is expected to come out around € 2 million under 2013 (2013: - € 13.7 million). - FY 2014 figures will show an impairment of Scapino goodwill according to current insights. - Implementation of strategy has been further sharpened; possibilities for cooperation and consolidation in Fashion will also be analysed.
Kurt Staelens, CEO of Macintosh “Growth of market share was a high priority for Fashion in 2014. Customer response to the renewal of our store formats was positive, which resulted in major increases in turnover in the first three quarters of the year. Just like the month of September, however, Q4, which traditionally is the period in which we realise a large part of our earnings for the year, brought the mildest fall/winter weather ever. As a result fall and winter sales in Fashion were lower than expected, which led to higher promotional discounts and pressure on margins. These developments more than offset the increase in Fashion earnings up to August. Besides short-term action programmes, shop format and supply chain transformation programmes have been launched to further improve the operational performance of our Fashion activities.“
1.
Underlying operational EBIT relates to EBIT excluding other income and one-off items. In 2013 the underlying operational EBIT was equal to ‘operating result exclusive of exceptional items’ of - € 1.0 million minus positive results of € 4.3 million relating to shop rental transactions and a net positive result of € 8.4 million because of other one-off items. These other one-off items include release of reservations for mainly employee cost in Living of € 3.0 million and sale of real estate for € 2.4 million. The other € 3.0 million mainly consists of (partial) releases of reservations.
Developments in turnover and results in Q4 2014
The shoe market was weak in Q4. The decline in October/November was 4.5% in the Netherlands and 2.8% in Belgium according to market research of GfK, while the UK market grew by 1.9% (Kantar).
In this weak market Fashion NL gained market share with € 1.7 million (+ 2.2%) higher sales. Fashion UK sales were up € 3.9 million (+ 6.1%) while Fashion BeLux sales were down € 2.0 million (- 5.7%). Online Fashion sales were 25.7% higher than in Q4 2013 and growth was significantly faster than the market.
Kwantum (Living) sales were up € 8.7 million (+ 18.7%) in Q4. CBS Netherlands only presented October figures, which show an increase on home decoration spending of 2.3%. Q4 Sales (€ million) Fashion
Total
Offline
Online
2014
2013
%
2014
2013
%
2014
2013
%
1
182.8
+ 2.0
166.6
167.0
- 0.2
19.8
15.8
+ 25.7
186.4
Living
55.1
46.4
+ 18.7
54.0
45.9
+ 17.6
1.1
0.5
+ 112.5
Total
241.5
229.2
+ 5.4
220.6
212.9
+ 3.6
20.9
16.3
+ 28.5
1.
Inclusive of positive currency effect of € 3.8 million.
Developments in turnover and results FY 2014
According to market research up to and including November, the shoe markets in the Netherlands and Belgium declined by 2.1% and 0.7% respectively (GfK), while the UK shoe market grew by 1.4% (Kantar). Fashion outperformed the market in the Netherlands (+ 12.6%) and the UK (+ 4.3%), while performance in Belgium was in line with the market.
Fashion NL sales were up € 19.8 million (+ 7.7%) despite a considerable fall in clothing sales at Scapino. Fashion UK sales were up € 20.0 million (+ 9.4%), Fashion BeLux saw a decline of € 2.1 million (- 1.4 %) and Fashion Other sales increased with € 0.7 million. Online Fashion sales went up 42.6%, mainly thanks to Fashion NL that showed an increase with 41.8%, which is significantly better than the Dutch online market
Kwantum (Living) sales were up € 10.1 million (+ 5.6%) in a home decoration market that has seen recovery since Q3. FY sales (€ million)
Total
Offline
Online
2014
2013
%
2014
2013
%
2014
2013
%
1
640.3
+ 6.0
617.5
597.3
+ 3.4
61.2
43.0
+ 42.6
Living
191.9
181.8
+ 5.6
188.3
178.9
+ 5.3
3.6
2.9
+ 23.4
Total
870.6
822.1
+ 5.9
805.8
776.2
+ 3.8
64.8
45.9
+ 41.3
Fashion
1.
678.7
Inclusive of positive currency effect of € 11.1 million.
The underlying1 operational EBIT of Macintosh is expected to come around € 2 million below 2013 (2013: - € 13.7 million).
1.
Underlying operational EBIT relates to EBIT excluding other income and one-off items. In 2013 the underlying operational EBIT was equal to ‘operating result exclusive of exceptional items’ of - € 1.0 million minus positive results of € 4.3 million relating to shop rental transactions and a net positive result of € 8.4 million because of other one-off items. These other one-off items include release of reservations for mainly employee cost in Living of € 3.0 million and sale of real estate for € 2.4 million. The other € 3.0 million mainly consists of (partial) releases of reservations.
The financial consolidation of the FY 2014 figures as well as the usual impairment analyses are still in progress. In the context of the decline of the size of the Dutch and Belgian shoe markets the future cash flows of Fashion in these markets will be reassessed also taking into account the necessary future investments in the shop formats. According to current expectations this will mainly affect Scapino and will probably lead to an impairment of around € 60 million (non-cash) on the goodwill and intangible assets of Fashion.
Strategy update
The cross-channel strategy pays off as is demonstrated by the 42.6% increase of online sales which is significantly better than market average and also given the strong growth of the number of cross-channel customers at Fashion NL.
The sharpening of the plans for Fashion is nearly ready and translated into transformation programmes with focus on format development, cross-channel, operational excellence and cost cutting. All with the objective to improve the performance of the Fashion activities.
Successful introductions of new shop concepts for Manfield and Young Fashion resulted in sales increases in Q4 in the new shops of more than 30% and nearly 20% respectively, compared to sales in the same shops in 2013.
Preferred relation with customers has been further extended with the 3D foot scan at Fashion Belux.
Disposal process Kwantum initiated.
A structural reinforcement of the competitive position of Fashion will be investigated pro-actively, also in the context of the in 2014 decreasing shoe markets in the Netherlands and Belgium. Thereby, options for further cooperation will be analysed which target on possibilities for supply chain optimisation and product development synergies as well as possibilities for format consolidation.
Further communication The annual results for 2014 will be published on 19 March 2015. At that time, further information will also be provided about the sharpening of the strategy and the transformation programmes and shortterm action plans. The Managing Board of Macintosh Retail Group NV Maastricht-Airport, the Netherlands, 20 January 2015 For more information, please contact: +31 (0)43 3280728 If different interpretations arise between de Dutch and English version of this press release, the Dutch version prevails
Macintosh seeks to offer consumers wishing to buy shoes or home furnishings a unique online and offline shopping experience, with a focus on convenience, service and emotion combined with familiar brands, excellent collections and customer knowledge, to exceed the expectations of customers, and to ensure that customers return to one of our store formats for their next purchase. Macintosh has more than 1,000 stores in the Benelux and the UK. Fashion comprises about 900 shoe stores under the Brantano, Dolcis, Invito, Jones Bootmaker, Manfield, PRO 0031, Scapino and Steve Madden brands in the Benelux and the UK. Living encompasses approximately 110 home furnishing stores under the Kwantum brand in the Netherlands and Belgium.
1.
Underlying operational EBIT relates to EBIT excluding other income and one-off items. In 2013 the underlying operational EBIT was equal to ‘operating result exclusive of exceptional items’ of - € 1.0 million minus positive results of € 4.3 million relating to shop rental transactions and a net positive result of € 8.4 million because of other one-off items. These other one-off items include release of reservations for mainly employee cost in Living of € 3.0 million and sale of real estate for € 2.4 million. The other € 3.0 million mainly consists of (partial) releases of reservations.
