Positive Start to 2017:
Significant Impact From Efficiency and Liquidity Optimisation Measures
3.2% Increase in Revenue – Significant Earnings Improvement
Haibach (near Aschaffenburg), 11 May 2017: Adler Modemärkte AG kicked off the new financial year on a positive note, significantly exceeding some of its own targets from the same quarter in 2016. In addition to revenue, earnings and cash flows also improved substantially. This was attributable to comprehensive measures introduced in 2016 to increase efficiency and profitability as well as to optimise cash flows.
ADLER significantly outperforms overall sector
In Q1 2017, ADLER built on earlier successes and outperformed the overall sector’s revenue trend: While the textile retail industry recorded a 2% decline in revenue according to Textilwirtschaft magazine’s TW-Testclub survey panel, ADLER increased its revenue in Q1 2017 by 3.2% to EUR 108.7 million (Q1 2016: EUR 105.3 million). On a like-for-like basis, this represents growth of 1.5%. The dynamic business performance in March in particular contributed to the positive results. The period from January to March is typically ADLER’s weakest quarter on account of the sell-off of winter merchandise.
Earnings benefit from improved cost efficiency
The Group’s cost of materials increased less markedly than its revenue, by 2.1% from
EUR 54.9 million to EUR 56.0 million. As a result, gross profit improved from EUR 50.5 million to
EUR 52.7 million. The gross profit on goods sold increased accordingly, from 47.9% to 48.5%.
As is typically the case with its business model, ADLER will also not begin to generate a profit in 2017 until the second half of the financial year. However, the positive news after three months is that earnings before interest, taxes, depreciation and amortisation (EBITDA) improved significantly from EUR -16.6 million in the previous year to EUR -12.5 million. This development is attributable to savings across all levels of the Group, in particular in terms of personnel expenses and marketing expenditures. Earnings before interest and taxes (EBIT) also increased significantly from EUR -20.6 million in the previous year to EUR -16.7 million in Q1 2017. Earnings before taxes (EBT) increased from EUR -21.9 million to EUR -18.0 million in the first three months of 2017.
ADLER reported a seasonally typical after-tax loss of EUR 13.2 million in the first quarter (Q1 2016: loss of EUR 15.0 million). The adjusted earnings per share amounted to EUR -0.71 (based on 18,510,000 no-par value shares) as compared to EUR -0.81 in the same period of the previous year.
Measures target, curb cash outflows in Q1 – Free cash flow only slightly in the red
The measures introduced to optimise cash flows had a clear impact on the cash outflow from operating activities, which amounted to EUR 11.8 million in the first three months of 2017, as compared to EUR 24.9 million in the previous year. In addition to the lower consolidated net loss, this change was attributable first and foremost to the systematic improvement in merchandise management, leading to the sell-off of existing merchandise and a significant reduction in mark-downs. Consequently, the EUR 14.2 million increase in inventories was less pronounced year on year (Q1 2016: EUR 22.7 million). The optimisation of the real estate portfolio also had a positive impact on cash flows. The sale of two buildings in Austria generated net cash inflows of approximately EUR 10 million.
At EUR -4.4 million, free cash flow was significantly higher than the prior-year figure (Q1 2016:
EUR -28.1 million). Excluding the extraordinary effect from the sale of the buildings, free cash flow amounts to approximately EUR -14.9 million, still substantially above the Q1 2016 figure.
Overall, the cash outflow typically seen in the first quarter was reduced significantly year on year: cash and cash equivalents decreased by EUR 7.4 million as compared to the end of 2016 to EUR 35.4 million. In the same quarter of the previous year, that decrease had amounted to EUR 31 million.
Forecast for full year 2017 confirmed
In light of the positive start to the year, ADLER confirms the forecast for the current year, as given in the 2016 Annual Report, despite what continues to be a challenging environment for the textile retail industry. In full year 2017, EBITDA is expected to increase significantly to between EUR 27-30 million (2016: EUR 23.3 million). The measures introduced in 2016 to save costs and increase efficiency are expected to continue to have an impact. This forecast takes into consideration the slight uptick in personnel expenses, due to the increase in wages, salaries and benefits, as well as a slight rise in transport and logistics costs. ADLER expects only minor changes as it pertains to the EUR/USD exchange rate. The same applies to the development of key commodity prices. A slight decline in revenue as compared to the 2016 financial year (EUR 544.6 million) is still expected on account of the challenging industry environment. It is expected that revenue generated by the online shop will once again significantly exceed the 2016 figure.
The full report on the first quarter of 2017 is available for download at http://www.adlermode-unternehmen.com/en/investor-relations/reports-and-publications/financial-reports/
ADLER Group’s key performance indicators
(EUR million) |
Q1 2017 |
Q1 2016 |
Change |
Revenue |
108.7 |
105.3 |
3.2% |
Gross profit |
52.7 |
50.5 |
4.4% |
Earnings before interest, taxes, depreciation and amortisation (EBITDA) |
-12.5 |
-16.6 |
24.7% |
Earnings before interest and taxes (EBIT) |
-16.7 |
-20.6 |
18.9% |
Consolidated net profit/loss |
-13.2 |
-15.0 |
12.0% |
Earnings per share (in EUR)* |
-0.71 |
-0.81 |
12.3% |
* Based on 18,510,000 no-par value shares
|
31 March 2017 |
31 Dec. 2016 |
Change |
Total assets (EUR million) |
238.7 |
222.6 |
7.2% |
Equity (EUR million) |
82.7 |
95.8 |
-13.7% |
Equity ratio (in %) |
34.6% |
43.0% |
-8.4pp |
Debt/equity ratio |
1.89 |
1.32 |
|
Cash and cash equivalents (EUR million) |
35.4 |
42.8 |
-17.2% |
Employees |
3,814 |
3,984 |
-4.3% |
Total number of stores |
183 |
183 |
– |
Contact:
Adler Modemärkte AG
Investor Relations
Katrin Schreyer
Tel.: +49 6021 633 1828
Email: investorrelations@adler.de
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