Switzerland : Despite fall in H1 sales, Charles Vogele profits scale up

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Despite fall in H1 sales, Charles Vogele profits scale up

20
Aug '13

In a challenging market environment, Charles Vögele Group improved its operational efficiency in the first half of 2013 and increased its gross profit margin. With gross sales reduced by 4% to CHF 555 million, gross profit went up by CHF 16 million to CHF 303 million.

Operating earnings (EBITDA) came to CHF 4 million. The consolidated loss for the first six months was down from CHF -54 million a year previously to CHF -21 million. This marks a further step on the road back to sustainable profitability.

The long winter and gloomy weather hampered sales throughout the whole clothing sector in spring 2013. With lots of rain, record low temperatures and only a few hours of sunshine, the whole industry suffered. Some providers saw business fall by up to 20% in the first quarter.

The odd warm day in April and sunny spells in June provided some relief. As a result of the disappointing turnover, the sales season was brought forward in many places, which intensified competition still further. Some providers were already discounting their goods by up to 50% in May.

Commenting on the first half year, Markus Voegeli, CEO of Charles Vögele, says: "We didn't panic when other companies started discounting so early but held our sales during June as planned - and so benefited from better margins."

Increase in gross profit and positive EBITDA

The company's net sales fell by 4% to CHF 466 million. After adjusting for exchange rates and floorspace (like-for-like) the fall was 5%. The management team focused on improving operating results. Thanks to targeted discount management, Charles Vögele was able to increase its gross profit despite the lower sales.

At CHF 303 million, gross profit was 6% up on the year-back figure. The gross profit margin went up accordingly from 59% to 65%. Continued strict cost management kept operational costs down. These were another CHF 11 million lower than in the prior-year period at CHF 299 million.

Operating earnings before depreciation and amortization (EBITDA) were positive at CHF 4 million, compared with the negative result of CHF -23 million a year previously. Operating earnings (EBIT) came to CHF -16 million in the first half of 2013, compared with the year-back figure of CHF -49 million. The consolidated loss was much smaller at CHF -21 million, compared with CHF -54 million in the first half of 2012.

Charles Vogele

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