Tiger of Sweden launches cost cuts, Thorsen to stand down as IC chairman
IC Group’s remaining brands, Tiger of Sweden and By Malene Birger continue to struggle to return to sales growth and the first of the two, Tiger, on Tuesday announced a number of cost-cutting measures, including organisational changes and store closures.
The company’s strategy is “to create a more competitive, digitally-oriented and agile brand,” and the new measures are part of this. They’ll mean non-recurring costs for financial year 2018/19 of around DKK10 million (€1.33 million), money that will mainly go towards severance payments and costs related to those store closures.
The company didn't share many details but said that from FY 2019/20, annual savings are expected to be around DKK10 million with the firm aiming to get Tiger of Sweden back “to the level of earnings performance generated in previous years as quickly as possible.”
Due to the new cost-cutting programme, IC also said that its group EBIT margin before non-recurring costs is now expected to be zero, rather than the 1% or 2% previously predicted. And Tiger’s “nominal earnings” are likely to be “a substantial decline” rather than the “moderate decline” that it had forecast earlier.
What does the company mean by ‘substantial’? It hasn't put any actual figures behind that description, although as far as revenue (in local currency) is concerned, it has revised it down from expectations of a "minor" reduction to a fall of between 6% and 7%.
Tiger of Sweden is expecting a 6% drop (admittedly not as bad as the prior year’s 9% fall) and By Malene Birger a 7% decline (but worse than the 4% drop of a year earlier).
At the same time as announcing the cost-cuts programme, IC Group also said that its chairman, Peter Thorsen, won't be seeking re-election at the company's AGM in September. It added that company shareholder Kirk & Thorsen Invest A/S intends to accept the pending offer from Friheden Invest A/S and sell all of its 373,855 shares in the group. Friheden Invest A/S owns around 77% of the shares at present and has submitted an offer to take full control.
Thorsen took over as chairman in 2017 “in order to head the new strategy process,” which included decentralising the group in preparation for establishing its remaining brands as independent business units. This task is largely complete with IC now comprising just its two main brands after a number of divestments.
But his decision to step down doesn't mean that Thorsen is cutting his ties with the company.
Majority shareholder and board member Niels Martinsen said: “I would like to thank Peter for his tremendous efforts in the transformation process. Friheden Invest A/S wishes that after his resignation as chairman of the listed company [he] continues to play a decisive role in the development of the group’s remaining brands.”
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