– Orders for 2006 Spring/Summer collections up by double-digit percentages from previous year
– Business performance fully on track for first nine months of 2004-05
– Consolidated sales up 2.6 %
– EBITDA up 35.3 %
– After-tax profit EUR 9.6 million
– Full-year revenue and earnings projections reconfirmed for fiscal 2004-05
– Outlook optimistic for fiscal 2005-06
With three quarters of the year now over, the ESCADA Group's business performance in fiscal 2004-05 remains firmly on track as planned. The maker of women's luxury fashions reported a moderate rise in revenues and a substantially sharper increase in earnings. The Company has reconfirmed its revenue and earnings projections for the year as a whole (end of year: October 31). New orders are performing very well at present, therefore management is optimistic for the coming year.
Performance in first nine months of 2004-05
– During the first nine months of the year, ESCADA Group revenues were up 2.6 percent, from EUR 450.9 million to EUR 462.6 million. This growth was supported mainly by the ESCADA brand, which gained 4.6 percent to reach EUR 312.7 million. After adjustment for foreign-exchange differences – i.e., based on constant exchange rates from the prior year – Group revenues were up 3.7 percent (ESCADA brand: +6.3 percent).
– Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) grew 35.3 percent to EUR 45.6 million, clearly faster than revenue growth (first nine months of 2003-04: EUR 33.7 million).
– Here the gross profit margin made a contribution, rising 1.2 percentage points to 63.0 percent. This improvement reflects a higher sell-through of merchandise at full price in the Company's own retail shops, and a better sourcing and production mix.
– Additionally, the leaner Group platform that was established last year lowered the cost ratio – operating costs relative to revenues – even further, to 56.5 percent (first nine months of 2003-04: 57.9 percent).
– Both of the Group's segments made a positive contribution to earnings. The ESCADA brand (ESCADA Collection, ESCADA Sport and ESCADA Accessories and Licenses) increased its EBITDA from EUR 24.7 million to EUR 33.0 million. The PRIMERA Group (apriori, BiBA, cavita and Laurèl) raised its EBITDA 29.6 percent, to EUR 14.0 million (first nine months of 2003-04: EUR 10.8 million).
– Earnings after taxes and minority interests were up to EUR 9.6 million, compared to zero for the equivalent period a year earlier.
– ESCADA is making good progress toward its goal of lowering capital tie-up even further. The Group cash flow after changes in working capital grew EUR 5.6 million in the first nine months to reach EUR 16.7 million. Despite the higher volume of business, inventories as of July 31, 2005, at EUR 141.6 million, were down from the same date a year earlier (EUR 146.1 million).
Third quarter performance 2004-05
– With business performing as planned overall, Group revenues for the third quarter were up 3.5 percent, to EUR 150.0 million (Q3 2003-04: EUR 144.9 million).
– EBITDA improved 37.9 percent, from EUR 8.7 million to EUR 12.0 million.
– Third-quarter profits after taxes and minority interests improved to EUR +2.8 million from EUR -2.6 million for the equivalent period last year.
Projections for 2004-05, and Outlook
For 2004-05 as a whole, ESCADA continues to expect Group revenues in euros to rise slightly. Management assumes that the improvement of EUR 11.9 million in EBITDA for the first nine months of the year will expand even further for the year as a whole (EBITDA for 2003-04: EUR 47.3 million). Thus the figure will outperform the previous expectation of improving EBITDA by at least EUR 10 million for the entire year. Moreover, management also expects the consolidated after-tax profit will increase more than proportionately, to more than EUR 10 million (2003-04: EUR 3.8 million).
ESCADA is currently meeting with a very positive response to its new collections and products. New orders for the 2006 Spring/Summer collections were up by more than 10 percent in value against the previous year, for both ESCADA Collection and ESCADA Sport. Demand for ESCADA is rising among wholesale customers and franchise partners especially, and in both Western and Eastern Europe. Orders for the 2006 Early Spring collections were already up some 6 percent from the prior year.
Wolfgang Ley, CEO of ESCADA AG: "The first nine months of this fiscal year show that ESCADA is on track for sustained, profitable growth. We're especially pleased at our vigorous new orders, which prove that our collections are meeting with an even more positive reception from the trade and among our end consumer. Only attractive products with time-tested ESCADA quality will allow us to pull clear of the still-weak market environment in women's luxury fashions. Our vigorous increase in new orders implies that business will continue to develop satisfactorily in the 2005-06 year ahead”.