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Positive free cash flow at Charles Vögele
23
Aug '12
Charles Vögele announced half year results for 2012. “In Switzerland in particular Charles Vögele continued to suffer as a result of customers’ uncertainty and a generally reticent mood throughout the clothing industry. After an unusually weak April  with very little footfall in shops, we brought forward the summer sale, though this did compromise profitability,” comments Frank Beeck, CEO of Charles Vögele, the half-year results. 
 
Key milestones in the first half-year included the reorientation of the company and the optimization and adjustment of all processes to fit the adapted brand strategy. Furthermore efficiency and cost gains were realized. The logistics has been functioning smoothly again since the beginning of the year.  
 
The group’s net sales fell in the first half of 2012 by –7% to CHF 487 million. During the first quarter in particular the weak euro again had a negative effect. Approximately half of the in total CHF 39 million decline in sales was due to the sharp depreciation of foreign currencies (mainly the euro) against the Swiss franc. In local currency terms the fall was –4%, or –5% after adjusting for exchange rate and floorspace changes (like-for-like). Due to price adjustments and increased sales activities the gross profit margin slipped from 63.5% to 59%. 
 
Charles Vögele’s operating costs were reduced again by CHF –21 million thanks to organizational optimizations and rigorous cost management. About half of the reduction can be attributed to the depreciation of the euro. This all resulted in operating earnings (EBIT) of CHF –48 million (HY1 2011: CHF –60 million, including CHF 36 million goodwill impairment) and a consolidated net loss of CHF –54 million (HY1 2011: CHF –62 million).  
 
Free cash flow improved to CHF 11 million in the first half of the year compared to CHF –60 million in the first half of 2011. The company is therefore on track to achieve the goal, communicated in March, of closing the financial year with a balanced free cash flow.  
 
In Switzerland, the overall market for outerwear shrank again in the first half of 2012. Continuing consumer caution and retail tourism across the Swiss border, prompted by the strength of the Swiss franc, put the brakes on sales despite targeted countermeasures. Charles Vögele also suffered in Switzerland in particular because of the negative news coverage. Overall net sales in Switzerland for the first six months of 2012 fell by –7%, while the market as a whole shrank by more than –4%. Charles Vögele plans to regain the confidence of customers with a large-scale image campaign in the second half of 2012. 


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