Fenix Outdoor International saw an upswing in its retail business in the third quarter, as Globetrotter's profit margin moved ahead of the plans for its turnaround.
The group's outdoor retail operations - Globetrotter in Germany, Naturkompaniet in Sweden and Partioaitta in Finland - jointly raised their sales by 4.6 percent to €79.0 million and their operating profit jumped by 52.7 percent to €11.3 million. The three retailers together form the Frilufts retail arm of the Fenix group. As reported last month, it has moved into another country with the acquisition of Friluftsland in Denmark, but the deal was finalized in the current fourth quarter.
Martin Nordin, chief executive of the Fenix group, said in a statement that it was too early to declare the turnaround of the Globetrotter business complete. The German outdoor retailer's sales remain behind target, but the opposite applies for the profit margin, after Fenix made the operation more efficient and implemented stringent cost control. Nordin added that Naturkompaniet continued its profitable expansion and that Partioaitta is performing well, particularly given the issues in the Finnish retail market.
Frilufts' turnover increased by 2.8 percent to €195.5 million for the first nine months of this year, with improvements in all markets. Sales were up by 6.5 percent to €40.9 million in Sweden, by 0.6 percent to €17.4 million in Finland and by 2.0 percent to €137.2 million in Germany. The retail group's operating profit more than doubled to €11.1 million for the nine months, up from €4.8 million. It ended the period with 60 stores, three more than in September 2016, including four franchises.
The brands owned by the Fenix group, from Fjällräven to Hanwag, Tierra, Primus and Brunton, performed even more strongly in terms of sales. The group continued to enjoy strong demand for the Fjällräven brand, but Nordin said that Hanwag has been striding ahead as well, with double-digit growth in the quarter, and Brunton's result was above expectations.
The turnover of the brands division jumped by 27.1 percent to €38.0 million for the three months, while its operating profit leapt by 13.5 percent to €20.2 million. This division encompasses Fjällräven, Tierra, Hanwag, Primus and Brunton, their online sales and stationary stores, and sales of distribution companies focusing on one brand. The global sales division, covering distribution companies selling more than one Fenix brand, saw its turnover surge by 27.3 percent to €50.8 million, and its operating profit jumped from €7.4 million to €11.3 million.
For the first nine months of this year, sales of the group's brands division advanced by 21.1 percent to €93.7 million, and their operating profit jumped by 10.3 percent to €41.9 million. They amplified by 60.8 percent to €16.4 million in Sweden, but they declined slightly in other Nordic countries. The division suffered a sales dip of 27.1 percent to €6.2 million in the Benelux countries. However, Germany performed outstandingly, with a sales increase of 22.2 percent to €48.5 million, and North American sales firmed up by 29.5 percent to €15.8 million.
The global sales division expanded in all of its regional markets to reach €117.5 million for the nine months, up by 23.2 percent. The increase chiefly came from western and eastern Europe, the U.K. and Asia, including the development of the group's joint venture business in China.
The global sales division's turnover firmed up by 29.0 percent to €8.0 million in Switzerland and by 16.4 percent to €33.3 million in Nordic countries other than Sweden. The sales decline of the brands division in the Benelux countries was nearly compensated by a sales rise of €1.5 million to €10.0 million for the global sales division. A sales dip for the brands division in other European countries was amply compensated by a surge of 40.3 percent to €29.6 million in the global sales division in the same regional unit. Its North American turnover was up slightly, and sales in other international markets soared by 62.5 percent to €14.3 million.
The entire Fenix group's turnover amounted to €168.2 million for the quarter, up by 15.4 percent. Its operating profit soared by 31.7 percent to €41.5 million, amounting to an operating profit margin of 24.7 percent, up by 3.1 percentage points. The group's net profit landed at €30.6 million, which was an increase of about 29.7 percent.
Nordin said there had been some pressure on cash flow due to the investment program launched last year. The company is building a semi-automated warehouse in Germany, which will support the development of its European online business with much improved operational efficiency. This online business accounts for about 10 percent of the group's turnover and about 20 percent of its business to consumer sales. The second part of the investments consists in an upgrade of the Fenix group's IT systems. Globetrotter will switch to the same platform as the rest of the company's retail business, and Fenix will implement a group-wide online trading platform and warehouse management system.
For the first nine months of this year, the Fenix group's sales jumped by 11.8 percent to €407.7 million. Its operating profit margin moved up by 3.2 percentage points to 17.2 percent and the net profit amounted to €50.2 million, up from €35.6 million for the same period last year. The group said that it should perform “all right” if the weather conditions are reasonable in the fourth quarter.