Press Release
Interim Report Q1 – 2009/10 (October 1, 2009 – December 31, 2009)
DOUGLAS Group remains on track:
- Group sales higher by 0.5 percent to 1.1 billion EUR
- Earnings before taxes (EBT) increase to 142 million EUR
- Annual forecast for FY 2009/10 unchanged:
- Sales growth between 0 and 2 percent
- Earnings before taxes (EBT) between 120 and 130 million EUR
Hagen, February 09, 2010 – "In consideration of the ongoing difficult economic conditions, we are quite satisfied with our first-quarter sales and earnings performance in Germany. However, rough waters lie ahead in some foreign markets due to tough economic times. Nevertheless, on the basis of a quite respectable Christmas trade – even when viewed across all countries – we have established a solid platform for the rest of the financial year," commented Dr. Henning Kreke, President and CEO.
In the first quarter of its 2009/10 fiscal year (October 1, 2009 - December 31, 2009), the DOUGLAS Group's net sales climbed by 0.5 percent to more than 1.1 billion EUR. Like-for-like sales – which reflect only those stores that operated during the reporting and comparable prior periods – were just 0.6 percent behind the previous year. It should be taken into consideration that the sales of the online book retailer, buch.de internetstores AG, were fully consolidated after having acquired a majority shareholding since December 1, 2009. Excluding buch.de, the DOUGLAS Group registered a marginal sales minus of 0.7 percent in the first quarter (like-for-like: -1.0 percent).
In Germany, first-quarter sales were up 1.3 percent. Pleasingly, like-for-like sales were also slightly higher by 0.4 percent than last year. The ongoing tough economic situation in several foreign markets led to a sales decline abroad of 1.0 percent (like-for-like: -2.5 percent).
Earnings before taxes (EBT) totaled 141.7 million EUR in the first quarter following 133.1 million EUR a year earlier. In addition to the improvement in operating earnings of 2.5 million EUR, the one-off valuation effect arising from the revaluation of shares previously held in buch.de in the amount of 6.1 million EUR contributed to this increase.
Earnings before interest, taxes, depreciation and amortization (EBITDA) of the DOUGLAS Group increased from 172.8 million EUR to 178.9 million EUR, predominantly from the one-off effect from the revaluation of shares previously purchased in buch.de.
The first quarter of fiscal year 2009/10 closed with Group net income of 96.3 million EUR after 88.2 million EUR in the same quarter last year. Correspondingly, the earnings per share increased to 2.45 EUR versus 2.25 EUR one year before.
The capital expenditure volume of 21.1 million EUR for the first quarter was 15.1 million EUR below the prior year's figure. The number of new openings dropped to 29 stores in the quarter under review (prior year's quarter: 51). Investments concentrated more strongly on adding store sales space and modernizing the existing store network. Capital spending focused on the Douglas perfumeries, with 20 new stores (prior year's quarter: 44); of which 17 (prior year's quarter: 40) were outside of Germany, mostly in Poland, Russia and Italy.
Sales performance in the Group's divisions
The Douglas perfumeries recorded first-quarter sales of 641.6 million EUR for the 2009/10 fiscal year, thus falling just short of the prior year's sales by 0.9 percent. However, currency-adjusted sales rose slightly by 0.2 percent. Like-for-like sales were 2.0 percent behind the prior year, which was primarily the consequence of the weak consumption demand outside of Germany.
The 452 perfumeries in Germany continued to deliver a satisfying performance given the challenging market environment. The perfumeries posted a sales increase of 0.9 percent, with like-for-like sales nearly matching the prior year's figure.
Given the persistently, poor consumption conditions in many foreign markets, the 778 perfumeries outside of Germany registered a sales decline of 2.6 percent. However, adjusted for currency effects, the decrease was only 0.6 percent. Sales growth recorded by the Douglas perfumeries in Poland, Italy and France could not offset the lower turnover posted in Spain, Portugal, Hungary and the Baltic States. Like-for-like sales fell by 3.9 percent.
The Books division succeeded in bolstering sales from the Thalia group by a solid 6.6 percent to 297.2 million EUR (like-for-like: 2.2 percent). This also includes the sales from buch.de, which has been fully consolidated since December 1, 2009. Adjusted for buch.de, sales at the 292 Thalia bookstores increased by 1.6 percent (like-for-like: 0.7 percent). Consequently, the Books division once again delivered a good performance in a difficult market environment.
In Germany, the Thalia Group (including buch.de) jumped 6.3 percent to 229.1 million EUR (like-for-like: 1.7 percent). Sales at the 236 bookstores in Germany rose by 0.9 percent (like-for-like: -0.1 percent). Sales abroad (including buch.ch) sharply increased by 7.7 percent to 68.1 million EUR (like-for-like: 4.0 percent). The 56 Thalia bookstores in Austria and Switzerland increased their sales by 4.1 percent (like-for-like: 3.4 percent). This positive trend is primarily due to the solid sales performance delivered in Austria.
In the Jewelry division, the 205 Christ stores improved their sales by 0.5 percent to 113.1 million EUR despite the tough market conditions. On a like-for-like basis, Christ also surpassed the prior year's high figure by 1.5 percent. Accordingly, Christ continued with its gratifying performance thanks to their successful realization of the exclusive and trends label strategy.
And, because of the still difficult industry environment, AppelrathCüpper remained 14.7 percent behind the prior year's sales figure. Adjusted for the AppelrathCüpper fashion house closed at the end of January 2009 in Berlin, the sales decline of 3.0 percent was, however, much more moderate.
The 275 Hussel confectionery shops achieved sales of 40.6 million EUR, falling short of the prior year's figure by 2.7 percent. Like-for-like sales dropped by 2.2 percent.
Outlook
In the current fiscal year, the favorable market positions of Douglas, Thalia, Christ, AppelrathCüpper and Hussel in respect of service, quality and ambiance will be further expanded in the German and European retail sector. With an equity ratio of more than 40 percent and its solid net assets, financial position and result of operations, the DOUGLAS Group is well-positioned to secure its position as a leading European lifestyle Group in the retail sector. To this end, approximately 120 million EUR is available for investments in the fiscal year 2009/10.
The top investment focus will continue to be placed on the Douglas perfumeries, which aim for value-oriented growth – albeit at a somewhat slower pace. Overall, about 40 new stores are due to open across Europe, with the expansion focus lying on Italy and Poland. Furthermore, store sales space will be extended along with the remodeling of existing perfumeries. In line with the strategic product-mix development, the expansion of exclusive and private labels will be the priority.
The Thalia bookstores will solidify their leading market position in German-speaking Europe by opening five to ten new bookstores along with numerous upgrades, while consistently pursuing its multichannel strategy.
In the Jewelry division, Christ will grow more profitably on its own and further extend its leading market position in Germany. To this end, up to ten new stores are due to open and various renovations are planned. Furthermore, Christ will expand its service expertise as well as enlarging the successful range of exclusive and private labels.
AppelrathCüpper aims to further develop its line of women's fashion clothes in the mid to upper genre at attractive prices, giving it a distinct younger look. The main challenge is to institute younger, more up-to-date and fashionable accents without neglecting the needs of its longstanding customers. AppelrathCüpper is directing all activities on the sustained improvement in profitability and intends to benefit from a recovery in the textile industry and restore its former strength.
The Confectionery division will continue to focus on developing existing markets in Germany and Austria. Hussel will continue to modernize its network, while adding up to four new Hussel confectionery shops. For purposes of securing quality and innovative leadership, Hussel will also continue to focus on product innovations and on private brands and licensing.
Forecast
With its sales and earnings performance in the first quarter of the fiscal year 2009/10, the DOUGLAS Group has established a solid platform for the rest of the current financial year. The sales and earnings forecasts issued in the 2008/09 Annual Report for the 2009/10 fiscal year are still valid. On the basis of current information, the Executive Board still predicts a sales gain of between 0 and 2 percent, with anticipated earnings before taxes of between 120 and 130 million EUR.
