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E-commerce Drives Douglas Group in Full-Year 2016-17

The Douglas perfumery chains’ online business helped offset dampened sales in Germany.

PARIS – Goodwill impairments in Germany and Spain helped dampen Douglas Group’s net profit during the fiscal year 2016-17.

Adjusted net income for the parent of the Douglas perfumery chain came in at a loss of 162 million euros in the year ended Sept. 30, versus a loss of 102 million euros in fiscal 2015-16. On a like-for-like basis, however, adjusted net profit was in the black, to 75 million euros, against 24 million euros in the prior year.

In the most recent 12-month reporting period, the company’s net sales advanced 3.2 percent to 2.8 billion euros in reported terms and rose 1.5 percent on a comparable basis, despite a competitive environment, the company said on Thursday.

“All of our regional segments, with the exception of Germany, contributed to the increase in like-for-like sales and adjusted EBITDA,” said Michael Rauch, Douglas Group chief financial officer, during a call with financial analysts.

He was referring to the adjusted EBITDA of 354.3 million euros in fiscal 2016-17, which was up 5.1 percent versus the prior year.

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Douglas’ domestic business continues to suffer after the terrorist attack on German soil last December. Rauch noted that following such an occurrence it generally takes about 12 to 18 months for customer traffic to pick up again.

But Internet sales weren’t dampened, continuing to build momentum.

“E-commerce, with 18 percent growth, remains the key contributor to our overall sales growth, with online shops operating in 17 countries, accounting for 14 percent of total sales [or 383 million euros] at the end of last fiscal year compared to 12 percent in the same period last year,” said Rauch.

Douglas ramped up its loyalty card activities, too, adding almost 2.7 million additional holders of the new Douglas beauty card, which was launched at the end of last year in Germany. That brought the total count to more than 5.6 million cardholders domestically. Altogether, over 7 million fidelity cardholders were added to make a total of 27 million, the company said.

During the past year, Douglas closed the acquisitions of the Limoni/La Gardenia, Bodybell and Perfumerias If stores for a total purchase price, net of cash acquired, of 330 million euros. Douglas said following the buys, which led to a one-off expense of about 50 million euros, it now has pole perfumery position in Germany, France, Spain, Italy and Poland.

Douglas Group has 1,915 stores in 19 countries altogether.

During the question-and-answer session, Douglas executives fielded a query about their view of the European Union’s Court of Justice’s judgment announced Wednesday, which confirmed that in order to preserve its products’ image, a luxury goods supplier can forbid authorized distributors from selling goods on third-party Internet platforms according to criteria.

As reported the court had reviewed proceedings begun in 2012 in Germany by Coty Germany against an authorized distributor, Parfümerie Akzente, with the aim of prohibiting it from distributing Coty’s products on, in accordance with a contractual clause.

“[It] protects us from this kind of online competition, specifically on Amazon, by maintaining for us our opportunities to use this channel for our non-selective assortment,” Tina Müller, Douglas Group’s newly appointed chief executive officer, said. “So we value and we see this decision very positively for our business.”