The Lafuma Group reported a net income of €4 million for the first six months of the year, compared with only €42,000 for the year-ago period. This is despite a drop of 4.9 percent in revenues to €81.4 million.
As an exception, the surf division, which generates 95.0 percent of its turnover in France, recorded strong results in the first half. Growth in direct sales via the Oxbow brand's own stores or online had a positive impact on sales, which increased by 6.4 percent to €13.7 million. This was supported by good weather conditions. The segment's operating profit increased by 16.1 percent to €3.1 million.
Sales declined in the other segments of the group's business, covering brands such as Lafuma, Millet and Eider. The management said the lower revenues could partly be explained by changes in its distribution model. Prompted by the arrival of Reiner Pichler as chief executive in 2016, the company is implementing new strategies, which call for changes to its distribution model in the U.S., the closing of its subsidiaries in Hong Kong in February 2017 and the reorganization of its factory in China. This resulted in a decrease in turnover of €2.6 million over the period.
The French group said the trading conditions remained challenging across its main markets, especially in the retail distribution network for its apparel products. It noted that factory outlet centers remain an attractive distribution network, while e-commerce is fast developing in a globally stagnant retail market, with a growth of 29.0 percent recorded by the group in the first half of the year.
In the group's Millet Mountain Group, sales declined by 9.0 percent to €37.1 million, although the rate of decline was reduced to 2.5 percent when the impact of the new strategies was removed. Sales increased in the German-speaking and Japanese markets, but this was offset by the late arrival of the winter season, the shutdown of Lafuma's sales subsidiary in the U.S. and the reorganization of the sales apparatus in Hong Kong. Sales in this segment accounted for 15.2 percent of the total turnover - up from 11.0 percent in the year-ago period - which, according to the company, demonstrates the positive effects of cost control measures implemented in its strategic plan.
The camping furniture division saw its revenues reduced by 2.3 percent to €30.6 million, partly due to the consequences of the cold summer of 2016, which resulted in high inventories at retailers. However, the company said that the heat of the summer of 2017 is expected to help the furniture division offset this decline in the second half of the year, with higher orders and an increase in online sales. The division's operating profit declined by 3.7 percent to €10.8 million during the period.
Overall, the group managed to raise its operating margin by 4 percentage points to 5.1 percent, partly due to cost control measures. Lafuma maintained its forecast for the full year, with sales expected to remain slightly below the level of 2016, due to its restructuring efforts in the U.S. and Hong Kong, but operating earnings should go up.
The financial developments at the French outdoor and surf group were mirrored by those of its parent company, the Swiss-based Calida Group, whose earnings increased during the same period in spite of falling overall revenues. That includes the results of two brands of lingerie, Calida and Aubade.
The group's total turnover declined by 1.9 percent to 176 million Swiss francs (€156.3m-$182.5m), with a drop of 0.5 percent in local currencies, but the net profit rose by nearly 71 percent to CHF 5.9 million (€5.2m-$6.1m). Operating earnings went up by 18.3 percent to CHF 5.8 million (€5.1m-$6.0m), thanks to greater efficiencies. The outlook for the full year calls for stable sales and earnings.