ESCADA PRETAX NET IN PERIOD RISES 31.1%

Byline: Jennifer Weil

PARIS — Escada Group reported that earnings before interest and tax in the first nine months of its fiscal year gained 31.1 percent, as sales fell 2.1 percent.
The profit in the period ended July 31 came to $13.6 million against $10.4 million a year ago. Sales were $573.5 million, compared with $585.8 million.
Dollar figures are translated from the German mark at current exchange.
“We are happy with the results for the first nine months,” said Wolfgang Ley, Escada’s chief executive officer, in a statement. “And we are sure that we can increase profits for the year as a whole by more than 10 percent. The results show that we are moving steadily toward our goal of achieving a return on sales for the group of 7 percent after tax within five years.”
“This year we would like to achieve profit growth over sales growth,” said Franz Egermann, Escada’s chief financial officer, in a telephone interview from Escada’s Munich headquarters. “We didn’t achieve as much in sales [in the first nine months] due to the restructuring of Blusen Neumann,” a mid-range company owned by Escada.
Escada also attributed the sales drop to the withdrawal of its Laurel collection from the U.S. market.7
“But despite this shortfall in sales,” Egermann continued, “we had better margins, better cross margins, a product shift more into the high-end and cost savings.” All of this contributed to the steep growth in profits.
Escada said that by concentrating on its more profitable areas of business and cost management, it was possible to increase gross operating profit by 1.2 percent, to $338.9 million from $335 million a year ago. It also reported that operating expenses were down 1.2 percent, to $337.2 million from $341 million.
A focus on the Escada brand collections “caused a slight shift of the distribution of total sales in the first nine months,” the company reported. The share of volume contributed by the House of Escada rose 3 percent — to make up 63.3 percent of the group’s total sales — while Laurel’s share fell 1 percent, to become 10 percent of the total volume, and the share represented by the German subsidiaries decreased 2 percent, to become 25.5 percent of the total volume.
Sales in Europe, the Mideast, Russia and North America — where Escada Elements as well as Laurel have been withdrawn from the market — were down for the period. In Asia, however, Escada had a sales increase of 32.7 percent.
For the rest of the fiscal year, Escada said it is expecting “a slight increase in sales.”

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