Robust retail sales enabled Peak Performance to deliver a sales increase of 2.5 percent to 284.6 million Danish kroner (€38.1m-$43.2m) in the quarter until the end of March, amounting to an increase of 3.6 percent in constant currencies.
The Swedish ski, outdoor, golf and fashion brand's retail sales soared by nearly 26.9 percent to DKK 103.4 million (€13.8m-$16.7m) for the three months, which are the third quarter of its fiscal year. This uptick more than made up for the negative impact of the closure of under-performing stores in the previous quarters. Retail sales were up by nearly 7 percent to DKK 254.4 million (€34.1m-$38.6m) for the first three quarters of the fiscal year, with comparable store sales excluding outlets up by 14.8 percent.
Meanwhile, the company's wholesale turnover was hurt by the refocusing of this channel in the third quarter. Peak Performance's sales in the wholesale and franchise business tumbled by 7.6 percent to DKK 181.2 million (€24.2m-$27.5m) for the three months, but they were still up by 1.8 percent to DKK 616.1 million (€82.5m-93.4m) for the first nine months of the fiscal year.
Mats Ryder, the chief executive of IC Group, the Danish company that owns Peak Performance, explained in a conference call that it has been cleaning up its wholesale business, to become more selective. But the decline in Peak Performance's wholesale turnover was also caused by slack sales in the winter, meaning that replenishment was reduced and that some wholesale customers spent more resources on clearing their inventories.
Ryder said there was still much work ahead to optimize Peak Performance's product offering and distribution, but the upcoming ranges support his belief that the brand is back on a solid growth track. Its leadership was taken over in September by Nicolas Warchalowski, former chief executive at Haglöfs, the Swedish outdoor brand.
Denmark and Norway led Peak Performance's expansion in the Nordics, while Germany and Switzerland contributed to growth in other European markets. Ryder said that the Alpine region as a whole performed well for Peak Performance in the third quarter.
Unfavorable exchange rate changes, stock write-downs and higher discounts led to a decline in Peak Performance's gross margin for the nine months. Then again, operational improvements enabled the company to reduce capacity costs.
Peak Performance's operating margin before depreciation and amortization slipped by 0.8 percentage points to 14.5 percent for the third quarter but it was up by 0.8 percentage points to 18.3 percent for the nine months. After depreciation, amortization and impairment losses, the Ebit margin landed at 12.8 percent for the quarter, down by 0.8 percentage points, and it improved by 1.1 percentage point to 16.7 percent for the nine months.
The entire IC Group saw its sales from continuing operations advance by 2.4 percent to DKK 2,145 million (€287.4m-$325.3m), which was a rise of 4.5 percent in constant currencies for the nine months. It was supported by sales increases for two premium fashion brands, Tiger of Sweden and By Malene Birger. The group's turnover was hurt by a drop of 9.9 percent in the sales of its non-core business, consisting mostly of the Saint Tropez brand.
Among the strategic developments, the IC Group said it launched a new e-commerce platform in March. All three of its premium brands are operating from this platform, with distribution handled by the group itself, which may yield cost savings as well as technological improvements.
The group is planning to instigate price increases for its brands, to help reduce the pressure on earnings caused by the changes in the exchange rate of the U.S. dollar. The impact should be felt from the first quarter of the next fiscal year.
Its gross margin was off by 2.0 percent to 54.7 percent and the Ebit margin for continuing operations contracted by 1.5 percentage points to 10.6 percent for the nine months. Adjusted for non-recurring costs in the second quarter and idle capacity costs due to divestments last year, the Ebit margin reached 12.0 percent. IC Group ended the nine-month period with profit from continuing operations reaching DKK 163 million (€21.8m-$24.7m), which was a decline of 14.2 percent.
The Danish group's forecast for the full fiscal year until the end of June calls for its turnover from continuing operations to reach about DKK 2,600 to DKK 2,650 million (€355.1m-$401.9m). Ebit for the premium brands should reach from DKK 200 to DKK 230 million (€30.8m-$34.9m), compared with DKK 193 million (€25.9m-$29.3m) in the previous year.