By  on June 29, 2007

PARIS — Escada on Thursday cautioned restructuring costs would send its full-year results into the red.

The Munich-based company issued the profit warning as it reported earnings improved to 9.3 million euros, or $12.2 million, in the first half ended April 30 after a loss of 3 million euros, or $3.6 million, in the same period last year.

Sales in the six months grew 3.7 percent to 344.3 million euros, or $452.6 million. In the second quarter, sales improved 10.7 percent to 183.1 million euros, or $240.7 million. Currency conversions were made at average exchange rates for the respective periods.

The group projected full-year sales and consolidated EBITDA would grow "moderately in the single-percentage-point range against the prior year."

Escada said its board had agreed to implement a strategic restructuring program called "Escada Excellence" with a view to consolidate the brand's identity, build a viable accessories business and "rationalize" the company's retail network in core markets.

Likewise, the firm said it would "execute structural optimizations" that related "to the retail network, the organizational improvement of the subsidiaries and the closing of contractual liabilities."

Escada estimated the costs would tally about 35 million euros, or $46 million, which, combined with new German tax legislation, would weigh negatively on full-year income.

"The Escada Group will complete [the fiscal year] with a loss after taxes of approximately 25 million euros [$32.9 million]," the company said.

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