BERLIN — With continued declines in earnings and sales, Escada’s battered bottom line saw no relief in the second quarter ended April 30.
The struggling German fashion house reported a pretax loss of 16.3 million euros, or $21.2 million, for the Escada business unit, compared with a pretax profit of 3.5 million euros, or $4.6 million, for the period a year previously. All dollar figures are converted from the euro at average exchange rates for the respective periods.
The Primera unit, which was recently divested and encompassed Laurèl, Apriori, Cavita and Biba, is not included in the results. Escada did not release pretax earnings for the entire group.
However, including Primera’s operations, Escada reported an after-tax loss of 82.6 million euros, or $107.6 million, in the second quarter, compared with an after-tax loss of 4.9 million euros, or $6.4 million, the year before. Escada attributed the steep decline above all to a writedown on assets of 55.1 million euros, or $71.8 million, relating to the divestiture as required by German law.
Second-quarter sales for the Escada segment fell 33.1 percent to 68.2 million euros, or $88.8 million. Sales for the Escada brand fell 27.5 percent to 66 million euros, or $86 million. Adjusted for currency effects, Escada brand sales were down 30.8 percent in the quarter, the company said.
Escada’s future remains extremely clouded. The company said it requires 30 million euros, or $41.8 million at current exchange, to remain liquid during the current fiscal year, though industry observers suggest funds could run out as soon as the end of July.
At the end of April, Escada unveiled a major financial restructuring and recapitalization plan which it said is necessary to ensure its survival. The plan includes a capital increase, a restructuring of a 200 million euros, or $278 million, bond issue due in 2012, renegotiating existing and future credit lines and calls for creditors to take a cut in repayment. No measures have been finalized to date. Escada said it plans to have the restructuring completed sometime in July.
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