Globetrotter's turnover declined in the first half of this year but the profitability of the leading German outdoor retailer sharply increased, judging from the performance of Fenix Outdoor International, the Swedish-based group that owns Globetrotter. The entire company's turnover was on the rise, driven by avid demand for the Fjällräven brand.
Fenix reports that sales of its Frilufts retail division reached €82.7 million in Germany for the six months, down by 6.9 percent compared with the year-ago period. Frilufts as a whole, including Naturkompaniet in Sweden and Partioaitta in Finland, turned in an operating loss of €3.2 million, but that was a marked improvement compared with the operating loss of €15.5 million for the year-ago period, which included restructuring costs of €4.9 million for Globetrotter.
The German retailer has downsized its business with the closure of an outlet store in Frankfurt, and a smaller store is closing this month in Filderstadt. It has been part of Globetrotter since the retailer purchased the Woick stores in 2014. Another small store has turned into a franchise, leaving Globetrotter with nine stores and one franchise, but Frilufts has unspecified plans to open stores again.
While Globetrotter is continuing to implement its restructuring measures, it has been investing in a new brand identity and private label. The orange displays at Globetrotter have been replaced with a more understated appearance with grey and dark red colors on its website, along with a new pay-off: Neue Horizonte, meaning new horizons.
Another striking novelty is Frilufts, a new private label. The brand is replacing the private labels that Globetrotter no longer purchases since it left the Euro Family of outdoor retailers. With its own website and pay-off, Take the Long Way, Frilufts is meant to complement the assortments of partner brands. The private label is sold by Globetrotter and Partioaitta, but the company says there aren't any plans to bring it into Naturkompaniet.
The Fenix group's retail sales in Sweden, which represent the turnover of Naturkompaniet, increased by 15.0 percent to €22.2 million for the first half. Friluft's sales in other Nordic countries, meaning Partioaitta in Finland, climbed by 3 percent to €10.3 million in a sluggish market.
The small decline in Germany dragged down the entire retail division at the Fenix group. It turned in sales of €116.1 million for the half year, down by 1.7 percent. The division ended the half-year with 58 stores across its markets, three stores below the count at the end of June 2015.
The second quarter alone saw a small decline in sales for the retail division, down by 3.3 percent to €64.3 million, but again the operating result for the division was much improved to an operating loss of €0.7 million, compared with a loss of €7.2 million for the second quarter in 2015.
This contrasts sharply with the brands division, where sales soared by 25.7 percent to €27.4 million for the second quarter. The increased leverage led to an even sharper rise in operating profit, up by 70 percent to €6.8 million for the quarter.
The brands includes Fjällräven along with Tierra, Primus, Hanwag and Brunton. The Fjällräven brand continued to rise, with unsated demand for its daypacks. On the other hand, Brunton's sales declined after it was decided to focus the brand entirely on instruments, chiefly compasses, because Fenix admitted that efforts to break into the “portable power” category had proved a failure. The brand was unable to compete with much cheaper products targeting broader distribution channels.
For the half-year, sales in the brands division jumped by by 17.5 percent to €59.8 million, with increases in all geographic areas other than the Benelux countries. Most notably, they moved up by 18.7 percent to €24.1 million in Germany, by 25.4 percent to €8.4 million in Sweden and by 18.1 percent to €19.6 million in North America.
The Fenix group's chief executive, Martin Nordin, said in a statement that the continued expansion of the Fjällräven brand brought its own challenges, such as alleged counterfeiting in Asia. Sales in countries outside Europe and North America increased by €0.2 million to €1.1 million for the half year.
The entire Fenix group's turnover was up by 8 percent to €111.9 million for the quarter, as the buoyancy of the brands more than made up for the slide in retail sales. It returned to an operating profit of €6.7 million for the quarter, compared with an operating loss of €3.1 million for the year-ago period. About half of the improvement relates to the impact of restructuring costs incurred in the same period last year at Globetrotter, the other half was attributed to stringent cost control sand increased sales. While the group remained loss-making at €5.1 million in the second quarter last year, it turned in net profit of €4.6 million for the same three months in 2016.
The first half showed the same trend, with sales advancing by 7.9 percent to €224.7 million and the operating profit margin inflating to 8.9 percent, compared with 0.2 percent. While there was still a net loss of €1.8 million half-way through the year in 2015, it transformed into profit of €12.0 million for the same period this year.