Tom Tailor brand has stronger Q3 but Bonita remains a problem
today Dec 13, 2019
Tom Tailor’s Q3 wasn't a spectacular success but at least the company saw its core brand sales growing in spite of difficult market conditions.
The company said that revenue at its signature brand rose 2.2% to €167.2 million and revenue for its Retail segment increased by 6.1% to €69.9 million.
But its Bonita label saw declining revenue, although the label’s EBITDA improved.
Looking at the results in more detail, the company said that continuing macroeconomic uncertainties impacted the textile industry once again in Q3.
Group revenues fell 1.7% to €210.6 million and gross profit was down 3.6% to €117.8 million. Reported EBITDA rose to €28 million from €10 million, due to the first-time inclusion of IFRS 16, but would have fallen to €6.6million without the IFRS 16 impact.
"The measures taken to strengthen the Tom Tailor brand are paying off in a persistently challenging market environment, confirming our decision to continue investing in the quality of our products and the desirability of our lines in future," said group CEO Gernot Lenz.
The firm’s eponymous label overcame some of the tough market’s issues, helped particularly by the Retail channel. As mentioned, the brand’s revenues rose 2.2% and Retail 6.1%, but Wholesale was down 0.4% and its gross profit margin fell. While reported EBITDA surged to €24.9 million from €19.3 million, without IFRS 16, it would have dropped to €14.2 million.
"We are pleased with the revenue performance of the Tom Tailor brand in the current year under report,” CFO Christian Werner said. “Compared to the previous year, the Retail segment in particular gained momentum and achieved pleasing growth in the third quarter. Nevertheless, we are expecting a slight decline in revenue for the group in fiscal 2019 compared to the previous year. This is mostly due to the drop in revenue for the Bonita segment.”
And Bonita is clearly still a problem. Revenue there dropped €43.4 million from €50.7 million, although the decline in revenue was “significantly reduced” compared to the first and second quarter of 2019.
Reported EBITDA was €3.6 million, up from a loss of €9.3 million a year ago. Without the IFRS 16 impact, it would have been a loss this time of €7.6 million.
“The consistent implementation of the new product range strategy with its clear focus on Bonita’s target customers and shorter ordering cycles is beginning to show results,” the firm said.
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