Haglöfs took a hit in sales but roughly trebled its operating profit last year, as the Swedish outdoor brand owned by Asics cut out unprofitable distribution and adjusted its branding to start expanding again this year. That is the company's situation as described by Peter Fabrin, the company's chief executive, who joined just over two years ago with a program to adjust the organization to make it more profitable, and to invest in brand value.
Fabrin says the company has radically cleaned up inventories, more than halving them in the last three years. The number of items was reduced by more than 25 percent and the number of suppliers was halved to 16. Haglöfs' payroll was reduced by about 20 percent and three subsidiaries were shut to be integrated into Asicss organizations in the Benelux countries, Japan and Korea.
The numbers reported by the Asics group, which acquired Haglöfs seven years ago, indicate that the Swedish company's turnover declined by 18.0 percent in reported terms and by 8.3 percent in constant currencies, reaching the equivalent of 9,163 million yen (€76.5m-$80.6m) for the year. The company attributed the decline to the decision to terminate unprofitable sales partnerships. Excluding these, sales grew in comparable units, with robust demand in the Nordics.
The Asics group further reported that the operating results of its “other business” division, which consists mainly of Haglöfs, amounted to an operating loss of ¥422 million (€3.52m-$3.71m), an improvement on the negative income of ¥666 million (€5.56m-$5.86m) incurred in 2015.
Haglöfs' CEO acknowledged there is room to improve the profit margin but he added that the group figures don't accurately depict the situation of the Swedish outdoor brand as a standalone business.
The company has started shifting its focus to expansion again. As previously reported, Haglöfs prepared for that with an updated brand appearance and tagline, in line with a plan to broaden its reach, moving beyond technical outdoor products to provide versatile gear for people who are active outdoors. The typeface of the brand has been rounded and the tagline has switched from Outstanding Outdoor Equipment to Beat the Elements.
Fabrin says Haglöfs has further added to the brand value with investments in sustainability. About 70 percent of the range has been earmarked as sustainable, as the company has stepped up its efforts, in partnership with the Fair Wear Foundation to comply with Bluesign standards and to use sustainable materials more broadly. Sales of Haglöfs' sustainable products jumped at a double-digit rate last year.
Geographically, the focus for Haglöfs' expansion is on Germany, where the brand rearranged its management in October. Moritz Kuhn replaced Herbert Horelt, who led the Swedish brand's German operations for many years and switched to Devold of Norway from the start of this year. The company is adding a product and marketing manager for the German market.
Another focus is on Asian markets, where Haglöfs is leaning on the infrastructure of the Asics group. The outdoor company dismantled its subsidiaries in Japan and South Korea to reduce costs and take greater advantage of the Asics group's resources. The regional distribution has been reinforced with the signing up of a partner in New Zealand which is already handling the Asics brand.
At the same time, Haglöfs will strive to uphold its strong position in the Nordics. It will have to deal with a prominent management change with the departure of Jonas Karlsson, who has been country manager of Haglöfs Scandinavia for more than ten years. He is apparently switching to Alfa Sko, the Norwegian outdoor footwear company. The change has been scheduled for the end of March and Haglöfs has yet to find a replacement.