Far-reaching changes implemented at Peak Performance in the last two years are apparently starting to pay off, with a sales increase of 21.9 percent to 267 million Danish kroner (€35.9m-$37.8m) for the quarter until the end of December.
This amounts to a sales jump of 24.0 percent in constant currencies. It was aided by the opening of eight new stores, which helped to push up retail sales by 24.0 percent to DKK 214 million (€28.8m-$30.3m), but the Swedish brand also enjoyed a comparable store sales rise of 16.4 percent, with more abundant sales in its stationary stores and online. Peak's wholesale turnover was up by 20.2 percent to DKK 143 million (€19.2m-$20.2m) for the quarter, although DKK 15 million of the increase could be attributed to a shift in timing.
The Swedish brand managed sales increases in all of the Nordic markets for the quarter, while growth in other European markets chiefly came from the Alps region. Sales outside of Europe, which are mostly derived from Canada, were flat for the three months.
The supervision of international distributors and the Canadian business has been entrusted since September to Martin Eisele. He has taken over from Martin Netinder, who became chief executive at State of Elevenate, the Swedish specialist in freeride skiing apparel. Eisele spent most of his career at the Adidas Group, until he switched to the outdoor industry in 2015 to join Nordic Kidswear, the company behind Isbjörn of Sweden.
In another change, Christopher Clementoni became country manager for Canada in November. He replaced Amber Nero, who spent more than four years with Peak Performance. Clementoni previously worked in sports retailing and most recently with the Adidas Group. His brief is to focus on growing Peak's wholesale business in Canada through lead agents, to upgrade key account management and to support the expansion of its franchised operations.
The quarter sharply raised Peak Performance's sales for the six months until the end of 2016, which form the first half of its fiscal year. It marks a return to robust expansion for the Swedish brand, after a dip in the fiscal year ended last June. Its sales advanced by 9.4 percent to DKK 615 million (€82.7-$87.1m) for the half-year, equivalent to a rise of 10.7 percent in constant currencies. The brand reaped an Ebit margin of 18.0 percent for the six months, up by 0.4 percentage point.
Peak Performance's retail sales were up by 17.2 percent to DKK 198 million (€26.6m-$28.0m) for the six months. Peak Performance had 47 stores at the end of last year, up from 35 at the same time in 2015. Two of the openings were in Finland, another two in Sweden and three in Norway. An outlet store in Germany was shuttered.
The brand's retail expansion comes after a revamp and upgrade of its store format, as previously reported. The sell-out has been ticking along, encouraging the company to support the rapid opening of new stores. Comparable store sales we,t up by 8.3 percent for the six months, fueled by increasing online sales.
Peak's wholesale turnover rose by 6.1 percent to DKK 417 million (€56.1m-$59.1m) for the half-year, marking a return to growth after some cutbacks in distribution. The streamlining of the brand's range is apparently appealing to more directional accounts. Its clean-cut urban range, which features a smaller logo, is helping consumers to mix and match, creating their own athleisure style. It has attracted customers like Volt Fashion, a leading Nordic fashion retailer.
Peak's launch at all of Volt Fashion's 90 stores in Sweden and Norway in the second half of the year was regarded as an important part of its push in the urban outerwear market - one of its stronghold categories along with ski and golf apparel. Peak was previously sold at another fashion chain called MQ, with more than 120 stores in Sweden and Norway, but this partnership was ended as Peak shifted to what it describes as a more progressive premium positioning. The brand is raising its investments in the urban outerwear category with a dedicated sales team and participation in fashion shows such as the Copenhagen International Fashion Fair and Pitti Uomo. A high-end urban outerwear range is in the making and will be showcased at Pitti Uomo next year.
The numbers were reported as part of a presentation by the IC Group, the Danish company that controls Peak Performance. The group has been downsized due to the divestment of various fashion brands, which led to a rethink of the group's management structure and the relationship between the head office and the three remaining premium brands. The changes favored more independence for Peak Performance, Tiger of Sweden and By Malene Birger, leading to the resignation of IC Group's chief executive, Mads Ryder, last month.
Peter Thorsen has been asked by the board of directors to take over the role of interim CEO for the group. In the new configuration, the role of the CEO will be modified, the company said. The final plan and the future management structure will be determined at a board meeting within the next six months.
IC Group's turnover inflated by 10.4 percent to DKK 666 million (€89.6m-$94.3m) for the second quarter of its fiscal year, up by 12.5 percent in constant currencies, driven by Peak Performance. The gross margin firmed up by 0.6 percentage points to 57.2 percent, due to better product margins and lower inventory write-downs. The operating margin more than doubled to 6.8 percent.
For the first half of its financial year, IC Group's sales amounted to DKK 1,517 million (€204.1m-$214.8m), up by 4.9 percent in reported terms and by 6.3 percent in constant currencies. It was again driven by Peak Performance, although Tiger managed a comparable sales rise of 4.6 percent. The group's gross margin was flat at 56.6 percent and the operating margin was down by 0.7 percentage points to 11.9 percent, due to increased costs for the expansion of the retail business. IC Group ended the six months with consolidated profit of DKK 135 million (€18.1m-$19.1m), down from DKK 145 million.
The group revised its sales guidance slightly downward for the year, blaming the development of wholesale orders, particularly for Tiger of Sweden. Sales for the fiscal year until the end of June are projected to rise by 5 to 6 percent in constant currencies, compared with a previously projected increase of at least 6 percent. IC Group has taken action with staff cuts and distribution changes, which are impacting the guidance for the Ebit margin as well. It was previously projected to attain a level of 8 to 9 percent, but the latest guidance stands at 7 to 8 percent, before one-off costs relating to the implementation of the new group structure. These costs should reach about DKK 30 million (€4.0m-$4.2m) and lead to an improvement in earnings of about DKK 30-40 million from the next financial year.