Fenix Outdoor International's retail business was affected by the absence of spring weather in the second quarter in northern Europe, but the whole group managed to raise its sales after two acquisitions and stronger demand in the U.S. market.
Martin Nordin, the group's chairman, explained in a statement that the weather in northern Europe went straight from winter to summer, which reduced sales of jackets and trousers. Instead customers bought tee-shits and shorts are a lower price per unit, which reduced the average shopping basket. He added that this issue was felt by the Fenix group's own stores as well as retail partners.
The entire Fenix group's net sales were up by 7.3 percent to €124.1 million for the quarter. The operating profit remained stable at €10.4 million, implying a decline in the operating profit margin by 0.6 percentage points to 8.4 percent. This includes a one-off negative impact of an estimated €2.2 million more than last year relating to integration and the group's logistics project in Germany. The formally Swiss company with head offices in Sweden saw its net profit increase by €0.6 million to €6.4 million for the quarter.
Sales under the company's Frilufts entity, encompassing retail operations, moved up by 3.4 percent to €67.4 million for the three months, but this is primarily due to the acquisition of Friluftsland, a Danish outdoor retailer purchased last September. The operating profit from the retail business in the quarter dipped to €1.5 million, down from €1.8 million. The group pointed to investments in store expansion and the integration of Friluftsland.
Globetrotter, Naturkompaniet, Partioaitta and Friluftsland jointly raised their sales by 6.2 percent to €123.7 million for the first six months of the year.
Globetrotter remained nearly stable with a turnover of €83.7 million, up by just €0.3 million. Sales at Naturkompaniet contracted by 3.0 percent to €22.3 million for the half-year, but they were stable in Swedish kronor. The turnover of Frilufts in other Nordic countries inflated from €10.1 million to €17.7 million, with the inclusion of Friluftsland.
This takeover of the Danish retailer helped to raise the total number of stores by ten to 70 at the end of June, including an unchanged number of four franchises. After a small operating loss in the first quarter, the Fenix group's retail business had a negative operating result of €0.5 million for the half-year, compared with a loss of €0.1 million for the year-ago period.
The weather was less of a headache for the Fenix group's brands, from Fjällräven to Hanwag, Tierra, Brunton, Primus and Royal Robbins, after its acquisition in March. Their turnover increased by 12.6 percent for the second quarter, despite a more restrictive distribution policy in some markets.
North America was singled out as a market with strong growth, excluding Royal Robbins. It delivered a sales hike of 26.4 percent on a reported basis, amounting to 33.8 percent in dollars. The acquisition of Royal Robbins should not have any major impact on the company's result for the year, but it did affect its results in the second quarter, due to a low volume of sales in these three months.
The group's brands division, relating to sales of each of the brands and the distribution companies that focus on any single brand, reached sales of €29.8 million for the quarter, up by 22.6 percent. Its operating profit moved up by €1.2 million to €7.3 million.
For the first six months of the year, this division raised its sales by 19.2 percent to €66.4 million, with increases in nearly all areas. This was aided by the addition of Royal Robbins and four extra single-brand shops, forming a group of 27 brand stores at the end of June.
One of the exceptions was Sweden, where sales fell by €1.1 million to €6.0 million, due to a change in distribution strategy. They jumped from €5.1 million to €7.0 million in the Benelux countries, but this has to do with the fact that Fenix established a brand distribution firm for Fjällräven in the area. Sales of the Hanwag brand in the same countries were transferred to the global sales division.
The turnover of the brands division continued to rise more moderately in Germany, the group's largest market, with a sales increase of 5.7 percent to €29.4 million for the six months. Sales in other European countries more than doubled from €2.4 million to €5.8 million. The division's turnover in North America reached €15.1 million, up from €10.1 million, but it declined by €0.5 million to €1.1 million in international markets outside of Europe and North America. The operating profit for the division in the six months jumped by 19.8 percent to €26.0 million.
The global sales division, focusing on companies selling more than one of the Fenix group brands, raised its turnover by 1.9 percent to €26.4 million for the second quarter. Its operating profit dipped by €1.3 million to €3.2 million, due to slightly more costs and the fact that the year-ago period included extra income from the acquisition of a minority stake in Bus Sport in Switzerland.
The trend was similar for this division in the first six months of the year, with a sales drop of 2.8 percent to €64.8 million and a slight decline in operating profit to €10.9 million. Sales in this division were slightly up in Switzerland and in North America. They declined by 6.8 percent to €17.8 million in Nordic countries other than Sweden, and they were off in the Benelux countries due to the above-mentioned transfer. The division added €1.0 million in sales in other European countries as well, to €17.3 million.
For the first six months of the year, the whole group's turnover amounted to €255.7 million, up by 6.8 percent. The operating profit moved up by 11.5 percent to €32.0 million, amounting to an operating margin of 12.5 percent, up by 0.5 percentage point. It ended the six months with net income of €22.7 million, up from €19.6 million.