By  on December 18, 2008

BERLIN — As expected, fiscal 2008 remained a tough year for Escada, with operative earnings falling 71.1 percent and group sales declining 15.1 percent.

Earnings after taxes are still being assessed, but Escada said the clear decline in sales plus restructuring expenses would translate into a net loss exceeding last year’s 27.3 million euros, or $40.9 million. All dollar figures are calculated from the euro at an average exchange rate for the period.

“Escada’s reorientation takes place in a difficult market environment,” said Escada chief executive officer Bruno Salzer. “Both customers and commercial partners are buying very reluctantly at the moment. Nonetheless, the market has reacted positively to the first signals of our group’s reorientation in its fashion statement, the handling of the markets and the full operative business process.”

According to preliminary figures released Thursday, earnings before interest, taxes, depreciation and amortization (EBITDA) for the year ended Oct. 31 reached 19.7 million euros, or $29.5 million, compared with 68.2 million euros, or $102.1 million, in the previous year.

The profit falls below the fashion house’s third lowered forecast issued at the end of September, which predicted EBITDA of between 23 and 26 million euros, or $34 million to $40 million. Escada attributed the results to “significantly lower sales.”

Group sales reached 582.5 million euros, or $871.8 million. Currency adjusted, this represents a 13.1 percent decline. Escada brand sales were down 15.7 percent to 388.7 million euros, or $581.7 million, with EBITDA reaching 18 million euros, or $26.9 million, compared to 49.1 million euros, or $73.5 million, the previous year.

Sales for the Primera division’s Apriori, Cavita and Laurèl brands and the Biba retail chain, now all officially on the selling block, declined 14.6 percent to 211.5 million euros, or $316.5 million. Primera EBITDA totalled 1.7 million euros, or $2.5 million, down from 20.1 million euros, or $30.1 million, in fiscal 2007.

As for the fourth quarter, the German fashion house said business conditions in the luxury market continued to deteriorate. Group sales fell 17.7 percent during the period.

At the end of October, group debt amounted to 177.1 million euros, or $265 million, up 12.4 million euros, or $18.6 million, in the year before, and inventories also exceeded last year’s levels by about 30 million euros, or $44.9 million. On the up side, operating costs (personnel plus other operating expenses) were pared down 4.8 percent for the year, and 16.7 percent in the fourth quarter.

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