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Operating cost for new openings impact Wolford earnings
Sep '12
Wolford Aktiengesellschaft, a publicly listed company on the Vienna Stock Exchange, seamlessly continued its positive sales development in the third and fourth quarters of the previous year during the first quarter of the current fiscal year. The Austrian luxury brand succeeded in increasing sales in the first three months of the 2012/13 fiscal year (May 1 - July 31, 2012) by 4.1 percent from the comparable prior-year period to EUR 33.1 million. This development can be attributed to the targeted expansion of Wolford’s international distribution network, amongst other factors.

The first quarter is traditionally the weakest of all quarterly sales periods due to the seasonality of business development and simultaneously involves disproportionally high costs in relation to sales. For this reason, Wolford’s first-quarter earnings indicators are generally negative, also in growth years. This applies as well to the first quarter of the 2012/13 fiscal year, in which earnings were also impacted by costs relating to the opening of new locations.

The Wolford Group achieved a further rise in sales of 4.1 percent in the first three months of the current fiscal year to EUR 33.1 million (Q1 2011/12: EUR 31.8 million) based on a strong performance in the first quarter of the previous 2011/12 fiscal year, which was characterized by sales growth of 6.5 percent in a quarterly comparison. Wolford’s first-quarter earnings indicators were always negative up until now due to the traditionally disproportionally high costs in relation to sales, which in turn is related to the seasonality of first-quarter business development. 
The opening of new boutiques in the second half of the 2011/12 fiscal year featuring correspondingly necessary start-up periods intensified this effect in the first quarter of 2012/13. As a consequence, EBITDA reported by the Wolford Group amounted to EUR -1.3 million in the first quarter of 2012/13 (Q1 2011/12: EUR 0.6 million), and EBIT totaled EUR -3.3 million (Q1 2011/12: EUR -1.3 million). The net result for the period was EUR -3.2 million (Q1 2011/12: EUR -1.8 million).
As at the reporting date of July 31, 2012, shareholders’ equity of the Wolford Group amounted to EUR 80.9 million, slightly below the comparable figure of the previous year (July 31, 2011: EUR 81.6 million). The equity-to-asset ratio at the reporting date was 53.0 percent, thus maintaining the high prior-year level (July 31, 2011: 53.2 percent). Net debt in the first three months of 2012/13 totaled EUR 26.6 million (July 31, 2011: EUR 25.6 million), corresponding to a debt/equity ratio (gearing) of 32.9 percent (July 31, 2011: 31.4 percent).

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Courtesy: Raymond

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