Peak Performance is continuing to reap the benefits of the changes implemented in the last three years, with a sales jump of 17.2 percent to 313 million Danish kroner (€42.1m-$51.6m) for the three months until the end of December, and a 24.5 percent rise in operating profit to DKK 61 million (€8.2m-$10.1m).
Amounting to 18.5 percent in constant currencies, Peak Performance's ample turnover rise for the second quarter of its fiscal year comes as its Danish owner, the IC Group, is continuing to consider strategic alternatives for the Swedish ski, outdoor and golf apparel brand. Alexander Martensen-Larsen, the IC Group's chief executive, said in a conference call with analysts this week that the process announced in October is on track, that it has entered the external phase and is still expected to be concluded before the end of the fiscal year, which is at the end of June.
Spread across all markets, the quarterly sales rise at Peak Performance was driven by a jump of 29.4 percent to DKK 185 million (€24.9m-$30.5m) in the brand's wholesale business, which generated more in-season sales. It was aided by a shift in the timing of deliveries from the first to the second quarter, amounting to about DKK 30 million (€4.0m-$4.9m). Without that and in constant currencies, Peak Performance's turnover was up by 13.6 percent for the quarter.
Peak Performance's retail sales advanced by 3.2 percent, due to the full-year contribution of new stores, increased online sales and outlet activity. Comparable store sales actually declined by 5.0 percent, despite the uptick in online sales. Martensen-Larsen reminded analysts that this came after three years of robust comparable store sales growth. The Swedish brand opened one store in the quarter, in Salzburg. It ended the year with 51 stores, up four compared with the end of 2016, including one concession.
Peak Performance's gross margin declined due to an unfavorable shift in the product and channel mix. Its operating profit for the quarter amounted to an Ebit margin of 19.5 percent, up by 1.1 percentage point, chiefly due to an improved cost ratio.
Peak Performance performed markedly better than the other brands in the IC Group. The company saw its sales increase by 1.1 percent to DKK 673 million (€90.4m-$111.0m), while its operating profit margin firmed up by 3.2 percentage points to 10.0 percent.
For the first half of the fiscal year, Peak Performance's sales moved up by 7.2 percent to DKK 659 million (€88.5m-$108.7m), with most of the improvement coming from the Nordic region. Sales were up by 8.1 percent in constant currencies.
Again, the improvement was driven by its wholesale business as well as new stores, online sales and increased outlet activity, while comparable store sales were down by 1.2 percent. Peak Performance opened three stores in the half-year, including the conversion of two Swedish franchises into fully-owned stores. The operating profit margin amounted to 20.2 percent, up by 2.2 percentage points, due to the higher sales and gross margin, while the cost ratio was unchanged.
With declines at Tiger of Sweden and By Malene Birger, the IC Group's turnover for the half-year was down by 2.2 percent to DKK 1,483 million (€199.3m-$244.5m). This was predominantly due to the group's weaker wholesale business, while its retail sales were pushed up by online sales and outlet activity. The shift to a larger share of own retail sales helped to raise the Danish group's gross profit margins. The operating margin was further supported by the impact of the structural changes implemented last year, which reduced capacity costs. The IC Group's operating profit margin improved by 2.1 percentage points to 14.0 percent.
The IC Group continues to anticipate a small decline in its sales for the full fiscal year, with an operating profit margin in the range of 5 percent, along the same lines as in the previous fiscal year. However, the group has adjusted its guidance for Peak Performance. IC Group still predicts moderate sales growth for the Swedish brand in the full fiscal year, which appears to imply a slowdown in the second half, but it expects significantly higher earnings, compared with earlier guidance of moderately higher earnings.
Peak Performance's growth is underpinned by the changes implemented in its design and marketing approach. This included the production of a more harmonized offering across all categories, with the aim to strengthen the ski, golf and urban outerwear categories, while expanding in the sportswear business. The ski and golf ranges have markedly raised their sales through accounts such as Stadium, Sport Schuster and Snow & Rock.
At the same time, Peak Performance continues to work on directional and upmarket ranges for the sports fashion market. The latest efforts include the X-Jackets, a range of men's outerwear based on designs from Peak Performance's archives, made with contemporary materials and in partnership with Beste, an Italian manufacturer. Another focus in this category is the second partnership between Peak Performance and Nigel Cabourn, which was showcased at Pitti Uomo earlier this year.
Separately, the brand won an Ispo Gold Award for the fourth time in a row, with its Frost Dry Down jacket. The most distinctive aspect of the piece is that the down channels are woven into the fabric and a membrane is added to the surface, giving it the appearance of synthetic leather and waterproof quality. The company says that laminate surface fabrics have been used before, but the technique of applying it to a material filled with down is the brand's innovation.
Peak Performance is continuing to align its management with its strategy by integrating its design and marketing teams. Jeanette Francke, previously marketing director at Peak Performance, was appointed as its creative and marketing director from November, to head up the merged teams. The company says that the re-organization helps to develop products in a more effective way and to respond to market changes more efficiently, with one person in charge of the entire process. Francke joined Peak Performance in 2013 as public relations manager. Lena Claesson, former design director, left Peak Performance in December.