The Fenix Outdoor International group reported slight declines in operating margins for the fourth quarter of 2018 and the entire financial year. They fell by two full percentage points to 9.1 percent for the quarter and by 0.3 percentage points to 15.4 percent for the year due to a variety of reasons including the weather, the difficult transition to a new logistic and IT system, the clean-up of some distribution channels in Europe and the dilutive effect of the acquisition of the Friluftsland chain in Denmark in the fourth quarter of 2017 and Royal Robbins in the U.S. last April.

The total revenues of the Swiss-based group, whose holdings include the Globetrotter chain and the Fjällräven brand, increased by 4.5 percent to €141.1 million for the quarter and by 5.7 percent to €582.8 million for the year. Ebitda declined by 5.6 percent to €17.5 million for the quarter, but it went up by 5.1 percent to €102.6 million for the year.

The results included extraordinary charges related to the reorganization of the company's logistics in Germany of €974,000 in the quarter and €4,173,000 for the year. Furthermore, Royal Robbins negatively affected the results by about €2.0 million in the quarter and more than €3.0 million for the year, but as reported in our last issue, Fenix expects major benefits from this brand going forward, at least in terms of sales.

Net earnings declined to €9.0 million for the quarter from €10.5 million in the same period of 2017. For the year, they were up to €67.4 million from €60.7 million. On the other hand, gross margins have continued to develop well, order books are positive in spite of the weather, and the profitability of Fenix's North American operations has improved to a level in line with the general performance of the group. Fenix's board is proposing a 20 percent increase in dividends for the year, as well as the repurchase of up to 700,000 B shares in the company.

Better results are expected once the group's new German logistic center in Ludwigsburg goes into operation at the end of the current quarter. Aside from cost savings, it should help service digital customers. The company wants to launch additional e-commerce operations in various markets this year as well as new brick-and-mortar stores.

The group's online sales rose to 22 percent of the group's total retail turnover in the fourth quarter of 2018 from 21 percent in the same period a year earlier. As we have previously reported, Globetrotter will open five new small-format stores in Germany this year. Furthermore, there are plans for between 8 and 12 new Fjällräven stores in North America.

Fenix's retail division, called Frilufts, saw its sales reduced by 5.2 percent to €71.1 million in the fourth quarter, and its operating profit fell to €1.4 million from €2.3 million. Besides Globetrotter in Germany, the division includes three other chains of multi-brand outdoor stores: Naturkompaniet in Sweden, Partoiatta in Finland and the newly acquired Friluftsland in Denmark.

Retail sales were negatively affected by a long and warm autumn, especially in Germany, where they declined to €174.1 million last year from €182.6 million in 2017. On an annual basis, they went up by just 1.1 percent to €273.4 million, mainly because of the takeover of Friluftsland in September of 2017, but the division's operating income dropped to €9.9 million from €13.4 million, partly because of the costly upgrade of the Danish stores. Sales went up at Naturkompaniet in terms of Swedish kronor.

The total number of stores in the Frilufts division increased to 74 from 69 in the course of the year, with the number of franchises reduced from four to three.

Aided by the takeover of Royal Robbins, Fenix's Brands division boosted its sales by 28.5 percent to €37.9 million in the fourth quarter and by 26.5 percent to €155.9 million for the full year. Because of cost increases, the division's operating earnings went up more slowly to still relatively comfortable levels of €10.4 million for the quarter and €65.3 million for the year.

Besides Royal Robbins, the Brands division includes other house brands like Brunton, Hanwag, Fjällräven and Primus. While Germany remained the biggest market in this division, with a turnover of €64.3 million in the past year, North America jumped ahead of Sweden into the second spot with sales of €43.0 million.

Fenix also has a Global Sales division that manages subsidiaries selling more than one of its brands. Its external sales went up by 4.0 percent in the quarter to €28.5 million. They declined by 2.3 percent for the year to €141.5 million, but posted an increase on a comparable basis.

The operating profit of the Global Sales division declined to €1.9 million in the quarter and to €22.5 million for the year. The results were mainly affected by higher marketing costs.

Fenix pointed out that it financial position remains strong, with higher consolidated cash of €101.9 million, in spite of the recent acquisitions, and lower interest-bearing liabilities of €24.9 million. The equity ratio stood at 70.9 percent at the end of 2018.