The Mammut Sports Group suffered an operating loss of 9.9 million Swiss francs (€8.7m-$10.4m) on a sales decline of 6.2 percent to CHF 95.1 million for the first half of this year, due to the increased costs incurred for the implementation of a five-year strategic plan started last year.
Conzzeta, the Swiss company that owns Mammut, said that 2017 marks a year of transition and the adjustments are well underway, but they are not expected to yield any relevant revenue contribution until the second half of 2018. However, the group said that Mammut was heading toward the start of the winter season with a more focused assortment, as it prepares a 20 percent cut in the number of styles in apparel.
The operating result worsened compared with a loss of CHF 4.5 million (€3.9m-$4.7m) in the year-ago period, due to extra costs to reinforce Mammut's resources for international development, digitalization, retailing and design. The extra investment comes at an annualized cost of about CHF 11 million (€9.6m-$11.6m).
Another issue was the relatively tough retail situation in the German-speaking markets. It continues to make up a large share of the group's turnover, at 48.9 percent for the half-year, but that's less than the share of 51.1 percent at the same time last year. Close-out sales were reduced by CHF 3.3 million (€2.9m-$3.5m), as a means to support Mammut's positioning as a high-end Alpine brand.
Conzzeta said in its half-year report that the strategic adjustments have been launched across the entire breadth of the business. It has initiated joint efforts with a pilot group to increase the floor space productivity of wholesale partners. This involves active floor management with data connectivity, adjusted assortments or shop-in-shop solutions.
Another part of the strategy is to push online business over own stores, as Conzzeta put it in a presentation for its half-year results. It went live with JD.com in China in the first half, and is planning to do so in the second half with Zalando in the German-speaking countries and with Amazon in the U.K. and Germany.
At the same time, Mammut has finalized a new store concept that will be ready to launch in early 2018. The presentation shows a very spacious store design, with a few pieces of wooden furniture and mountain photography, and relatively few items of merchandise. The company has 76 mono-brand stores, down one compared with the end of last year.
The Conzzeta group as a whole raised its turnover by 19.3 percent to CHF 625.9 million (€547.3m-$659.5m). This was an increase of 11.1 percent in constant currencies and for continuing operations, compared with a weak first half in 2016. It was driven by the group's business in sheet metal processing and its expansion in Asia. Conzzeta's operating profit (Ebit) margin was up by 1.0 percentage point to 5.8 percent and the group's result soared by 44.0 percent to CHF 30.0 million (€26.3m-$31.7m). For the full year, the group expects faster growth than in 2016 and an Ebit margin of around 7.5 percent.