BERLIN — Escada AG’s bottom line is back in the black as the German fashion house’s stringent cost-cutting program bolstered results.
In preliminary figures released Tuesday, Escada reported a consolidated aftertax profit of 4.5 million euros, or $5.5 million, for the year ended Oct. 31, 2004. This compares with a loss of 77.6 million euros, or $86 million, the previous year, and includes a one-time restructuring charge of 5.4 million euros, or $6 million, which mainly relates to the divestment of Escada’s 90 percent stake in Louis Féraud GmbH .
All dollar figures are calculated from the euro at the average exchange rate.
Consolidated earnings before interest, taxes and amortization reached 47.4 million euros, or $58 million, up from 8.4 million euros, or $9.3 million, the year previously.
Escada attributed the improved earnings performance to its cost-cutting program, which achieved savings in 2003-2004 of almost 45 million euros, or $55 million. This surpassed the original target of 40 million euros, or $48.9 million. The restructuring program involved 850 job cuts, about 550 in the core Escada business, and the closure of 19 Escada and 19 Primera shops.
Consolidated sales inched up 0.8 percent for the year, to 625.5 million euros, or $765 million. Adjusted for currency effects, sales rose 3.5 percent, the company said. Sales of the Escada brand, which had been down 13 percent in 2002-2003, were up 0.7 percent to 413 million euros, or $505.1 million. The company noted a higher full-price sell-through rate at its own and franchise shops boosted performance here.
Wolfgang Ley, chief executive officer of Escada AG, said the coming year would be marked by a concentration on sales and growth in the group’s own retail trade, as well as expansion of wholesale sales and distribution activities, with an eye on the strategic key markets of China, Eastern Europe and Japan, and the hedging and stabilization of business in the U.S.
The company plans to optimize existing collections, improve gross margins by better sourcing and intensified use of state-of-the-art manufacturing methods, and continue reduction of costs and improved synergies.
Ley said he expects group revenues to increase on a euro basis in fiscal 2004-2005, a significant growth of pretax earnings and a “disproportionate improvement” in consolidated aftertax profit.
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