Peak Performance saw a further deterioration in operating results for the three months of the fourth quarter to June 30, despite growing revenues, while the brand continued to invest in new stores and completed the clean-up of the wholesale channel and reducing discounts to a maximum of 40 percent. It ended the period with 1,814 wholesale customers, down from 1,918 a year ago and a total of 39 own retail stores, up from 32. The number of franchised stores declined from 45 to 36.
Noting that it has started to see the first positive results of a re-positioning process that was initiated in 2014/15, the management said that the brand's products have been improved, concentrating on five collections – Ski, Golf, Active, Sportswear and Urban - and the distribution has been restructured. It will continue to add new stores and shop-in-shops in the present 2016/17 financial year, and it plans to expand further in the countries around the Alps.
Sales jumped by 34.1 percent from the year-ago quarter to 110 million Danish kroner (€14.8m- $16.7m), or by 36.2 percent in constant currencies. Revenues from the wholesale and franchise segment grew by 27.7 percent to DKK 46 million (€6.2m-$7.0m), while the retail segment gained 39.1 percent to DDK 64 million. However, the brand deepened its operating loss by 13.2 percent to DKK 43 million (€5.8m-$6.5m), as higher operating expenses offset an improvement in the gross margin.
IC Group, the parent company, said that while the brand's retail sales had been buoyant in the first half of the year, it experienced a sudden deterioration in sales from the third fiscal quarter, partly due to the accelerated clean-up of the wholesale business as part of a bold strategic plan to upgrade the positioning of the brand, its ranges and stores. It was started under the leadership of Nicolas Warchalowski, former chief executive of Haglöfs, who took on the same job at Peak Performance in October 2014. The situation worsened markedly toward the end of the quarter and the slump continued into the fourth fiscal quarter.
Meanwhile, sales for IC Group as a whole grew by 3.2 percent to DKK 509 million (€68.4m-$77.1m), but its losses widened by 116.6 percent to DKK 26 million. It managed to grow or maintain revenues across all of its brands, boosted by a strong performance from e-commerce and higher revenues from outlets.
The revenues from Tiger of Sweden declined by 6.1 percent and by 4.8 percent in local currencies to DKK 217 million ($32.9m-€32.9m), with a 4.8 percent drop in constant currencies, despite growth of 40.3 percent in Germany. Revenues from By Malene Birger increased by 6.7 percent to DKK 80 million ($12.1m-€10.7m), or by 8.1 percent in constant currencies. Saint Tropez reported a strong growth, whereas Designers Remix recorded lower revenues.
The group's gross margin improved by 1.8 percentage points during the quarter to 57.2 percent, which was primarily attributable to higher margins on sold products.
For the full fiscal year, IC Group's results show revenues from continuing operations up by 1.0 percent to DKK 2,665 million (€403.6m-$358.0m), or by 1.9 percent in local currencies. Peak Performance's sales dropped by 1.8 percent, or by 1.4 percent in constant currencies, inching down to DKK 936 million (€125.7m-$141.8m).
The decline at Peak Performance was most pronounced in the Nordic countries, where sales fell by 11 percent, and was driven by a drop of 8.1 percent in wholesale revenues attributed to the clean-up of the wholesale distribution channel. Meanwhile, sales through the brand's own retail stores grew by 12.0 percent to reach 36.0 percent of sales, up from 32.0 percent in the previous year.
The growth reflected the addition of seven full-price stores, primarily in Sweden, and three outlet stores. One store was closed. Same-store sales grew by 17.9 percent, but the growth was driven primarily by robust e-commerce and clearance activities.
Gross margins increased at Peak Performance in spite of the stronger dollar, but the Ebit margin declined to 10.0 percent from 11.2 percent in the previous year.
The group's gross margin gained 2.0 percentage points to 56.8 percent for the year, while the operating margin gained 1.5 percentage points to 11.5 percent before amortization (Ebitda).
Going forward, the group expects that its premium brands will drive the total revenue development through both the wholesale and the retail channels. It forecasts that revenues will grow by at least 6.0 percent year-on year. It also expects to open 10–15 new stores during the 2016/17 financial year.