The New Wave Group suffered a 6 percent sales decline to 616.8 million Swedish kronor (€62,4m-$74.4m) for the three months until September in its sports and leisure division, which involves a dozen brands including Craft and Cutter & Buck and partnership with Speedo in the Scandinavian markets.
The decline was blamed chiefly on exchange rate changes, along with delays in deliveries from Asia and strikes in the port of Gothenburg. Weather issues in the U.S. particularly affected the div ision's sales of golf apparel, which form a substantial part of the turnover with Cutter & Buck, Annika and other businesses. New Wave said that the sports and leisure division would probably continue to be affected by the weather situation in the fourth quarter and perhaps beyond.
Yet, the Swedish company is upbeat about its prospects due to various investments, including the launch of teamwear for Craft and marketing investments planned for the U.S. in the fourth quarter. Team sports clothing will not have much impact this year but New Wave anticipates that it will contribute to the Craft's sales growth in 2018. The group expects that the brand will outfit 20 to 30 teams in the two highest leagues as well as national teams in football, handball and floorball in Europe. Craft footwear is set to hit store shelves early next year.
The sports and leisure division's sales in the latest quarter were down at its retail operations, but they firmed up in the promo business.
The division's turnover increased in European countries other than the Nordics, but this could not make for declines in Sweden, other Nordic countries and the U.S.. Despite the decline in sales, the operating profit of the sports and leisure division (Ebitda) moved up by 5.4 million to SEK 98.9 million (€10.0m-$11.9m).
Adding the corporate promo, gifts and furnishings divisions, the New Wave Group as a whole raised its sales by 2 percent to SEK 1,331.1 million (€134.6m-$150.6m) for the quarter, which was a rise of 4 percent at constant exchange rates. The group's operating result moved up by 14.5 percent to SEK 143.0 million (€14.5m-$17.3m). The company ended the three months with net profit of SEK 105.3 million (€10.6m-$12.7m), up by 21.7 percent from the year-ago period.
For the first nine months of this year, the sports and leisure division's turnover inched up by 1 percent to SEK 1,714.7 million (€173.4m-$206.9m). Sales were flat at the retail operations while they improved in the promo business. Again, the increase was driven by European markets other than the Nordics. Thanks to a higher gross profit margin and lower costs, the division's operating profit advanced by SEK 21.1 million to SEK 160.6 million (€16.2m-$19.4m).
Due to a more buoyant first half, the Swedish group's sales for the first nine months of the year moved up by 8 percent to SEK 3,967.0 million (€401.2m-$476.7m), generating a 0.8 percent improvement in the operating margin to 7.5 percent. The end result was a rise in net income of 39.1 percent to SEK 207.2 million (€21.0m-$25.0m).
New Wave has been raising its turnover each quarter for more than two years in a row, and it surpassed the threshold of SEK 5,500 million over the last 12 months. The operating profit for the nine months was about twice the level recorded the corresponding period of 2015.
The Swedish group has been investing in logistics, with new warehouses in Germany and Belgium, and a distribution center in Toronto with a capacity of 1.6 million units or 66,000 boxes.