Pandemic hurts Wolford, but debt-free firm is on recovery trail
Wolford released its delayed results for its shortened fiscal year late on Wednesday and while it swung to a profit, the upscale Austrian hosiery and bodywear specialist also talked of “significant business losses” due to the pandemic.
Clearly, the May to December period last year saw ups and downs. Following the reopening of stores in Europe, the US, and China after the first wave of Covid-19 in Q2 2020, the renewed lockdown in Europe since October 2020 led to those losses, “which will extend in all probability into the second half of 2021”.
That said, Wolford generated sales of €68 million in the period and sales fell ‘only’ 25% compared to the comparable eight months in 2019.
Now for those profits. Despite the sales losses due to Covid-19, Wolford achieved a group profit of €12.8 million, easily beating the €14.5 million loss of a year earlier. But it wasn't quite what it seemed as it was helped by “the sale of real estate and the change in the value of right-of-use assets following the implementation of impairment tests”. It gained €72 million from the sale of its Bregenz property and used it to pay off all debt.
The shortened year also saw it implementing further restructuring measures. This meant personnel costs were reduced by more than 20%.
And its major pivot to online saw e-sales rising 45%. The company said the revenue share of its own online business and of its wholesale partners’ e-stores increased to around 21% of its total.
Its quick reaction to the pandemic also meant sales of its Wolford Care Masks exceeded €10 million. It’s sold 0.7 million of them and they’ve become “a must-have of the Wolford product range”.
The company added that its The W and W Lab collections were “also successfully incorporated into the brand architecture and are part of the new face of the Wolford brand”. And the collaboration with Adidas has “significantly exceeded expectations”.
Meanwhile, the relaunch of the Essential Collection has started, which will see targeted campaigns in the months to come.
The company is also expanding with a focus on Poland, Scandinavia, the United Arab Emirates, Central America, and Japan. It has reached partnership agreements with “well-established agencies and distributors to leverage their markets' knowledge and presence in their respective territories and several multi-brand doors have been opened during 2020”.
It has a target of reaching break-even in fiscal 2021 and so far this year, its earnings are 22.4% higher than the previous year. Its gross profit margin has risen by 1.7 percentage points and initiatives such as remote selling and streaming, meant March sales were almost €2 million (38%) higher than the previous year.
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