Desigual wants to be more consumer-focused and nimbler.
The Spanish retailer on Friday said it recorded a 7.8 percent drop in sales in 2016 to 861 million euros, or $924 million, from 933 million euros, or $1 billion in 2015.
The Barcelona-based retailer’s profit rose 9 percent in 2016 to 71 million euros, or $76.2 million, from 64.6 million euros, or $69.4 million, the previous year. The increase was mainly due to an efficiency plan that launched in 2015 and is focused on revising the store network, geographic locations and product categories. Desigual’s business is centered in Europe, which accounts for 90 percent of its turnover. Latin America, which represents 10 percent of sales, performed well, “demonstrating brand potential for this geographic area,” the company said.
Earnings before interest, taxes, depreciation and amortization decreased 17 percent to 166 million euros, or $178.3 million (19 percent of sales), in 2016, from 200 million euros, or $214.8 million (21 percent of sales), in 2015. Desigual said 2016 the decline in EBITDA was due to the drop in sales, the rise in the value of the dollar against the euro and investments in quality such as incorporating new fabrics and materials. Net cash flow in 2016 reached 381 million euros, or $409.5 million, compared with 298 euros, or $320.2 million, in 2015. All figures were calculated at current exchange.
Desigual’s plan includes product innovation, segmenting collections differently and updating products more often — up to four times a season — in order to meet consumer demand. The retailer said it’s making progress. Designs geared to different wear purposes, such as the weekend, work and night, have been introduced. In an effort to respond faster to trends, up to 25 percent of the collection is new each month.
Desigual launched a new store concept in Barcelona on Las Ramblas, which was designed in collaboration with architect Lázaro Rosa Violán.
The retailer also said that it has hired David Meire as chief client officer. Meire spent 17 years at Nike leading business development and running the company’s European retail business.