As the Mammut Sports Group tightened its distribution last year, its sales dipped by 1.9 percent to 228.6 million Swiss francs (€260.8m-$320.7m), but the company saw ample improvements in its own retail and online business, and it points to a slight increase in orders for the summer season.
The Swiss outdoor company's sales decline amounted to 1.7 percent in constant currencies and its operating profit (Ebit) margin shrank by 0.4 percentage points to just 0.1 percent. This brought an operating profit of CHF 0.1 million (€0.11m-$0.14m), down from CHF 1.2 million, as reported by Conzzeta, the Swiss group that controls the Mammut brand.
Mammut's investments last year focused on international and digital development, as part of a five-year strategy adopted in 2016, around the appointment of Oliver Pabst as chief executive in September of that year. Thirty full-time functions have been created at the group to support the strategy, in the areas of digitalization, retailing and international markets.
Management changes continued this month with the appointment of Joe Prebich as managing director of Mammut North America. He will take over in late April from Bill Supple, who launched Mammut into the North American market and led the brand in the area for 17 years. Prebich was most recently brand vice president at Fjällräven North America. He worked previously for brands such as Oakley and Red Bull, specializing in brand marketing, digital development and online sales.
Part of Mammut's strategic plan is to improve the quality of sales by reducing the share of sales through low-margin distribution, to intensify partnerships with specific wholesale customers and to invest in own retail sales. About €9.5 million in low-margin and liquidation sales were eliminated as part of this strategy in 2017, which raised the share of sales from more profitable distribution. The investments to improve partnerships with retailers and increase the productivity of retail space include a digital link, the creation of a central database for sales support and more shop-in-shops.
At the same time, the range of Mammut products available on e-commerce platforms was expanded. The Swiss group as a result reported a considerable rise in Mammut's sales through its own online store and digital marketplaces. Mammut also optimized its network of mono-brand stores and implemented a new store concept. The number of outlets increased by nine to 86, including two newly created pop-up and shop-in-shop formats.
The group has also been working to make its product assortment more efficient. Its apparel range, which makes up well over half of the sales, was pared back by about 20 percent. Mammut adopted a modular concept with a central range, which makes it easier to implement a harmonized brand identity and raises productivity, owing to lower stock levels and more efficient sourcing.
Adding its industrial activities, the Conzzeta group's sales moved up by 22.5 percent to CHF 1,482.8 million (€1,691.8m-$2,080.4m) in 2017. Its operating profit surged by 46.0 percent to CHF 123.2 million (€140.6m-$172.9m), amounting to an Ebit margin of 8.2 percent, up by 1.2 percentage point. Conzzeta ended the year with a profit rise of 52.4 percent to CHF 97.4 million (€111.1m-$136.7m).
Conzzeta said that the strategic plan at the Mammut Sports Group is progressing as planned. It anticipates improvements in sales and profit at the outdoor company this year, although it warned that this entity would fall short of the group's mid-term targets. The benchmark is Conzzeta's ambition to achieve annual sales growth of more than 5 percent, an operating margin of 8 percent to 10 percent, and a return on net operating assets of more than 15 percent. Conzzeta as a whole is projecting high single-digit sales growth, a higher operating result and a further improved operating margin in 2018.