After a decrease in business in the second quarter, the Wolford Group returned to sales growth in the third quarter. Compared to the year-earlier period, sales in the third quarter (Nov. 2004 – Jan. 2005) grew by 2.5 percent. "The strong sales in the Christmas period put the company back on the growth track," explains Wolford CEO Holger Dahmen. Cumulative sales in the first three quarters of the 2004/05 fiscal year (May 2004 – Jan. 2005) effectively matched the prior-year level, being down just 0.1 percent from EUR 90.55 million to EUR 90.48 million.
The chief reasons for this were the significant cumulative sales growth this fiscal year to date in Austria of 9 percent (attributable in part to the integration of the 13 outlets acquired from Palmers), a stabilization in Germany, the biggest market, and excellent cumulative revenue gains made in the CEE countries (up 25 percent), Scandinavia (15 percent) and Italy (14 percent). Double-digit cumulative increases were also achieved in the U.K.(up 12 percent, or 9 percent in local currency) and the Netherlands (up 11 percent).
Sales in the U.S. were up 2 percent in the third quarter on a local-currency basis. Cumulative sales in the U.S. in dollars exactly matched the prior-year level, but on a euro basis were down 7 percent from the previous year due to the weak dollar.
In Germany in the last quarter, sales grew for the first time since 2001, by 6 percent. This reduced the year-over-year cumulative decline in the first three quarters of the fiscal year to 5 percent (versus a drop of 11 percent in the first six months). Meanwhile, the performance in Switzerland remained unsatisfactory. Compared to twelve months earlier, sales there fell by 14 percent. The business trend also continued to be negative in the Far East, where the distribution structure was reorganized.
The sales share of Wolford-owned stores again grew slightly to 27.4 percent. In the first nine months, sales in this distribution channel were up 0.8 percent from the previous year, or up 3.5 percent when exchange-rate effects are excluded.
At the end of January 2005, the Wolford Group had 230 boutiques, compared to 226 at the beginning of the fiscal year. In total, the first three quarters saw 18 closures and 22 new store openings. 172 boutiques are owned by partners and 58 by Wolford. In the third quarter, a new Wolford-owned boutique opened its doors in Malmö (Sweden) and three were acquired from partners (Austria: Vienna/Wollzeile, Germany: Hamburg/Airport and Münster/Roggenmarkt).
While the Wolford boutiques again increased their sales, the revenues via department stores remained stable. An encouraging trend is seen in the multibrand (i.e. specialist retailer) channel, where a substantial increase during the third quarter brought sales to a level near that of the prior year.
The two core businesses of Legwear and Bodywear together continued to account for about 87 percent of brand sales, with a small shift in their respective shares. One reason for the success in Legwear was the brisk demand for timeless hosiery products. In the Bodywear product group, the popularity of classic models and the trend toward high-quality materials such as merino wool continues.
Both the spring/summer 2005 collection – partly already available at the points of sale – and the expanded second Pucci/Wolford collection are meeting with high market acceptance. Also being continued in the spring/summer season are the designer collaborations with Lagerfeld Gallery and Vivienne Westwood; these products will soon be shipped. Additionally, a Europe-wide media campaign will be launched in February for the Armani collection that is intended to give this line significantly greater exposure.
Whether the positive sales trend continues in the final quarter of the year will depend very much on the coming follow-up order volume and is difficult to predict at present. For the entire 2004/05 fiscal year, the management aims for a slight increase in sales over the previous year.
The sales figures reported here represent preliminary data. The final sales data as well as the full business results for the first three quarters of 2004/05 will be published on March 15, 2005.