Fenix Outdoor International finished 2017 with a strong quarter, generating increases in sales and profits in most of its wholesale and retail activities, and its order books are in robust shape for this year so far.
The formally Swiss group saw its sales increase by 9.5 percent to €135.4 million for the quarter. The company's operating profit soared by 53.8 percent to nearly 14.8 million but it ended the quarter with a decline in profit to €10.5 million, because it had to pay income tax of €4.5 million for the three months instead of gaining €2.7 million in tax for the year-ago period.
With Globetrotter in Germany, Naturkompaniet in Sweden, Partioaitta in Finland and Friluftsland in Denmark, the Frilufts retail division raised its sales by 10.3 percent to €75.0 million for the quarter. It remains unclear what was the contribution of Friluftsland, which was acquired by Fenix last year and consolidated from the start of October. However, the group said that Frilufts was ahead of plan for both the year and the quarter. The operating profit of the retail division firmed up by €0.3 million but remained weak at €2.3 million for the three months.
The Fenix group said that its wholesale business continued to perform well. The Fjällräven brand contributed the largest portion of the quarterly growth, with increasing demand in a wide range of products. The brand is enjoying continued demand for its backpacks but they were outgrown by other product categories in North America, the Nordics and South Korea. The group added that the Hanwag and Tierra brands delivered double-digit sales increases as well.
Fenix Outdoor ended up with sales of €552.6 million for the full year, which was an increase of 11.4 percent. Its operating profit climbed faster, up by 40.4 percent to €84.9 million, meaning that its operating profit margin inflated by 3.3 percentage points to 15.7 percent. The Swedish-based group's net profit for the year amounted to €60.7 million, up from €48.2 million in 2016.
The company pointed out that its retail business had fluctuated during the year, but it ended up with a sales increase of 4.7 percent to €270.5 million. Growth picked up in Germany, where Globetrotter's sales inflated by 2.4 percent to €182.6 million for the year. They advanced by 5.1 percent to €57.5 million in Sweden and soared by 20.2 percent to €30.4 million in other Nordic countries, but again that was distorted by the acquisition of Friluftsland.
The retail division's operating profit margin reached nearly 5.0 percent, up by 2.4 percentage points, albeit below the group's long-term target. Fenix pointed to an improved gross margin and the continued impact of its savings program and cost control. At the same time, it referred to internal and operational challenges ahead for the retail division, including the implementation of a new ERP system at Globetrotter and the move of its business to consumer and retail warehouse to a semi-automated facility in Ludwigslust.
The brands division, relating to Fjällräven, Tierra, Primus, Hanwag and Brunton, along with their online sales and distribution companies focused on sales of one brand, raised its sales across nearly all geographies for the year. This led to a sales rise of 19.6 percent to €123.2 million and an operating profit of €51.6 million, up from €44 million. The increase was aided by two extra brand stores, raising the number to 24 at the end of the year.
The brands division's sales declined slightly in Sweden and the Benelux countries but advanced briskly in other territories, driven by Fjällräven and Hanwag, the German footwear brand. The division's turnover jumped by 23.2 percent to €62.1 million in Germany and by 30.5 percent to €23.5 million in North America – turning that into the second-largest territory for the brands, ahead of Sweden, with a push from own retail sales. The brands division delivered an operating profit of €51.6 million, which amounted to a decline of 0.8 percentage points in its operating margin to 41.9 percent.
The global sales division, consisting of distribution companies selling more than one Fenix brand, turned in sales of €144.9 million, up by 17.9 percent. Its turnover was down by 5.4 percent to €28.2 million in North America but otherwise increased in all territories, including a jump of 52.6 percent to €17.4 million in markets outside of Europe and North America. This partly relates to the acquisition of Alpen International, the South Korean distributor for Fenix products.
The group's business in China, consisting of a 50 percent joint venture that is not consolidated, contributed what was described as a healthy profit for the group. Fenix said that its investments to move into China had been more than repaid. The sales and profit rises in the Chinese joint venture contributed to a rise of €8 million in the operating profit of the global sales division to €25.5 million.