Restructuring measures implemented at the Millet Mountain Group caused a sales decline of 6.4 percent to €95.7 million last year, but the entity grouping together the Millet, Eider and Lafuma brands in the outdoor and snow market would have raised its sales by 0.8 percent without the impact of these measures and in constant currencies. Aided by a favorable trend in gross margin and cost adjustments, the division's operating profit improved by 6.3 percent to €21.5 million.
The Lafuma group launched restructuring measures at its mountain sports entity about two years ago. The moves included the closure of a U.S. subsidiary for the Millet Mountain Group near Denver, and the switch to a distribution partnership for the Millet and Eider brands in the U.S. market.
Another entity was closed in Hong Kong, along with half a dozen Lafuma brand stores in this territory. The stores had been opened as a means to gain traction in the Chinese market, but they became less relevant after the sale of the Lafuma brand's rights for China to LG Fashion, the South Korean group. The Lafuma brand switched to a distribution partnership for Hong Kong, which was excluded from the deal with LG Fashion. The closure of the U.S. and Hong Kong entities cost about €4 million, which was absorbed in 2016. Millet has its own subsidiary in China, a strategic market for the brand.
Adding other activities in the outdoor furniture and surfing markets, the entire Lafuma group suffered a sales dip of 3.9 percent to €160.5 million, but the company attributed this to the above adjustments. Excluding the store closures in Hong Kong, sales would have moved up by 0.5 percent. Paired with a focus on reducing costs and improving profit margins, the measures did contribute to a jump of 67.6 percent in the Lafuma group's operating profit from ordinary activities to €6.3 million.
Other operating revenues amounted to €1.0 million, compared with a charge of €3.7 million in 2016. The company turned in a profit of €5.4 million, compared with a loss of €1.2 million in 2016.
The reported downturn in the Millet Mountain Group's sales could not be entirely compensated for by its activities in surfing and outdoor furniture, both of which improved.
Its surfing division, which mostly consists of the Oxbow brand, raised its turnover by 6.0 percent to €26.8 million last year, while its operating profit moved up by 14.2 percent to €5.8 million. The French company described this as a significantly positive performance, with a return to growth and durable results.
The outdoor furniture division's sales dipped by 1.1 percent to €38.0 million. But Lafuma said that this division remains the most profitable and its potential remains strong, which encouraged the group to invest in its international expansion and strategic development into new market segments. Due to these investments, the entity's operating profits declined by 7.5 percent to €10.7 million.
Lafuma intends to pursue sustained investments in its brands and to accelerate its digital development this year. The company said that the potential of its online business was considerably enlarged after the Calida Group, the majority shareholder of the Lafuma group, acquired Reich Online Services in Germany in March 2017. This deal enlarges the digital reach of the Lafuma group and it provides extra insights into the development of the French company's existing online business. However, Lafuma adds that it will face challenging economic conditions in its market segments, which should lead to stable sales and a flat operating margin.
The Swiss group specializing in lingerie has implemented restructuring measures that helped to raise its operating profit by 18 percent to 21.6 million Swiss francs (€18.4m-$22.6m) on a sales increase of 2.6 percent to CHF 380.6 million (€323.5m-$397.5m). The group ended 2017 with profit of CHF 16.9 million, up by 14.3 percent compared with the previous year.
The Calida group pointed out that it more than doubled sales through its own online business last year, due to the acquisition of Reich Online Services, which was accompanied by sizeable investments. Online sales made up 8.2 percent of the Swiss group's turnover in 2017, up from 3.6 percent the previous year. This rise of 130 percent in online sales was driven by the takeover of Reich Online, but the company said that it also included organic growth of 24 percent, with a continued shift in consumption toward online channels.
The Calida group's turnover was pushed up by a double-digit sales increase for Calida's menswear business, the wider modernization of the Calida brand and growing exports for Aubade, its upmarket lingerie brand. The improved profitability of the Lafuma group and Oxbow's return to growth were two other positive factors.
The changes at Calida and Lafuma were driven by the Calida Group's chief executive, Reiner Pichler. Under the structure implemented two years ago, six general managers report directly to Pichler, including Frédéric Ducruet for the Millet Mountain Group and others for Lafuma outdoor furniture, Oxbow, Calida, Aubade and Reich Online Services.
Separately, Calida announced earlier this month that it had raised its shareholding in Lafuma to 79.15 percent by taking over a package of 7.6 percent that belonged to Jean-Pierre Millet. A long-term shareholder with a financial background, unrelated to the Millet brand, he will remain on the Lafuma group's board. About 8 percent of the shares are held by the Caisse des Dépôts and the remaining 12 percent are in free float. The Calida Group said it was not a strategic priority to further enlarge its stake.
The Calida Group is also proposing the appointment of Nathalie Gaveau to its board of directors, to replace Jean-Paul Rigaudeau, who has been on the board for two years but decided for personal reasons not to stand for re-election. Gaveau is a French woman who manages Shopcade, an online platform for international brands including Topshop, The Body Shop and Hugo Boss.