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Escada Posts Quarterly Loss

Escada Group's profits and sales for the second quarter ended April 30 registered significant declines. Last week, Escada issued its second profit warning...

BERLIN — Escada Group’s profits and sales for the second quarter ended April 30 registered significant declines. Last week, Escada issued its second profit warning of the year, citing unexpectedly poor performance of its Primera division.

This story first appeared in the June 27, 2008 issue of WWD.  Subscribe Today.

In the second quarter, net losses totaled 4.3 million euros, or $6.6 million, compared with a profit of 2.4 million euros, or $3.7 million, a year earlier. Sales saw a 16.1 percent decline to 153.7 million euros, or $235.7 million. Sales fell 13.5 percent on a currency-adjusted basis.

Group earnings before interest, taxes, depreciation and amortization were down 21.9 percent to 12.5 million euros, or $19.2 million. All dollar figures were converted at average exchange rates for the respective periods.

The German fashion house said the Escada brand registered a 6.1 percent increase in EBITDA to 10.5 million euros, or $16.1 million, and attributed the improvement to a higher share of sales in the company’s own stores as well as earnings from hedging foreign currency transactions. The Escada business unit’s second-quarter sales, however, were down 14.2 percent to 101.9 million euros, or $156.3 million.

The Primera division, which includes the Biba retail chain and fashion brands Laurèl, Apriori and Cavita, saw EBITDA drop 67.2 percent to 2 million euros, or $3.1 million, as sales declined 20.3 percent to 55.2 million euros, or $84.6 million.

For the first half, the Escada Group posted net losses of 8.2 million euros, or $12.3 million, compared with profits of 9.3 million euros, or $13.9 million, a year earlier. EBITDA fell 48.7 percent.

As reported, Escada is now forecasting net losses for the full fiscal year, with EBITDA projected to reach 37 million euros instead of 51 million euros. Consolidated group sales are expected to decline by a low-double-digit percentage point.