Interim Report H1-2010/11: DOUGLAS Group remains on track

Hagen, Germany May 11, 2011 – The DOUGLAS Group is satisfied with its Easter sales and after the first seven months of the 2010/11 fiscal year (October 1, 2010 to April 30, 2011) can report sales of 2.1 billion EUR, an increase of 2.8 percent. Like-for-like sales, which only take existing store locations into consideration during both reporting and reference periods, were up by 1.7 percent at the end of April.

In Germany sales as of the end of April rose by 4.6 percent (like-for-like: +3.2 percent). Abroad, however, the figure fell slightly, down by -0.7 percent (like-for-like: -1.2 percent).

When comparing the semi-annual figures with the previous year, it must be taken into account that all of this year’s Easter sales came in April, i.e. in the third reporting quarter. In the previous year, almost all Easter sales were included in the second reporting quarter. Against this backdrop, Dr. Henning Kreke, President and CEO of DOUGLAS HOLDING, indicated his satisfaction: “We are quite pleased with sales growth in the first six months of the fiscal year. As Easter was in April this year, the result as of the end of March was, as expected, below that of the previous year. However, at the end of April, the figures are in line with our expectations. Therefore, we can confirm our sales and earnings forecasts for the current fiscal year.”

Thus, the Executive Borad anticipates sales growth of 2 to 4 percent and earnings before taxes (EBT) of about 140 million EUR for the 2010/11 fiscal year.

Growth during the first half year of 2010/11 (October 1, 2010 to March 31, 2011)
For the DOUGLAS Group, sales in the first six months of the 2010/11 fiscal year were solid although Easter sales came too late to be included in the result. Net sales rose by 2.1 percent to 1.87 billion EUR. On a like-for-like basis, this reflects an increase of 0.9 percent.

“We have done remarkably well, especially in Germany. The German Douglas perfumeries and Christ jewelry stores in particular, but also the AppelrathCüpper women’s fashion stores showed healthy growth. In addition, our online sales have risen in the first six months by 34 percent as a result of the rapid expansion of our multi-channel strategy,” said Dr. Henning Kreke, indicating satisfaction with Internet sales. “During the first half of the year, online sales were about 6 percent of total sales.” This share is expected to grow to about 10 percent in the next three years.

As Easter sales did not fall into the reporting period, earnings before taxes (EBT) came in at 121.4 million EUR and, as anticipated, did not equal the previous year’s figure of 130.2 million EUR (the previous year’s figure was adjusted for the revaluation of shares amounting to 6.1 million EUR, a non-recurring item).

“All in all, we are quite satisfied with the earnings as of the end of March. It is gratifying that the Douglas perfumeries almost matched last year’s earnings despite the fact that Easter sales, which are important for our bottom line, did not occur until the next quarter. Both Christ and AppelrathCüpper were even able to surpass the previous year’s results,” stated Dr. Henning Kreke. Thalia, on the other hand, showed results that were significantly lower than last year. The main reason was the continued unsatisfactory sales growth throughout the industry, especially in Germany. The increasing shift of sales to online retailing had an additional adverse impact on revenue. At Hussel, the fact that Easter sales fell into the next quarter resulted in a decline in earnings.

The DOUGLAS Group’s earnings before interest, taxes, depreciation and amortization (EBITDA) rose from 202.2 million EUR in the previous year to 206.9 million EUR in the reporting period due to the non-recurring income from the divestment of the companies in Russia. The EBITDA margin, the ratio of EBITDA to sales revenue, was at the previous year’s level at 11.0 percent.

As of the end of the reporting period, the investment volume of the DOUGLAS Group was 55.3 million EUR compared to 45.5 million EUR in the previous year. In addition to the opening of 34 new specialty stores (previous year: 49), capital expenditure went primarily into modernizing existing branch stores and expanding their floor space. At the end of March 2011, the DOUGLAS Group had 1,927 specialty stores and 23,745 employees.

Sales by divisions
Easter sales, which are vital for the DOUGLAS Group’s divisions, were entered in April this year, while last year, they occurred mostly in March. To enable as precise a comparison as possible, the following overview presents the cumulative sales after seven months, i.e. as of the end of April.

In the first seven months of the fiscal year, the nearly 1,200 Douglas perfumeries generated sales revenue of just over 1.2 billion EUR, an increase of 1.0 percent. The stores in Germany recorded a sales gain of 4.8 percent, while abroad sales dropped by 2.8 percent.

In the Books Division, sales in the more than 290 Thalia bookstores and in the online shops in Germany, Austria, and Switzerland went up by 4.5 percent to around 582 million EUR. In Germany, the generated sales revenue totaled 440 million EUR, a gain of 3.2 percent. Foreign sales revenue rose by 8.6 percent to 142 million EUR.

In the Jewelry Division, the positive trend in the more than 200 Christ specialty stores continued, with their sales revenue climbing by 10.1 percent to 214 million EUR.

In the 13 AppelrathCüpper women’s fashion stores, the Fashion Division also continued its upward trend, increasing its revenue by 2.4 percent to just over 77 million EUR.

In the Confectionery Division, the roughly 250 Hussel confectioneries profited from Easter sales in April and were, therefore, able to significantly reduce the minus in sales of -5.8 percent as of the end of the first half year. As of the end of April, the generated sales revenue was 68 million EUR, only 1.4 percent lower than last year’s figure.

“Our growth during the first seven months was quite satisfactory,” Dr. Henning Kreke concludes and adds, “With an equity ratio of 46 percent and our solid balance sheet, financial standing, and earnings, we remain in a good position for sustainable growth along value-based lines as a leading European lifestyle group in both stationary and online stores.”

For that purpose, for the 2010/11 fiscal year an investment budget of around 125 million EUR has been set aside. Capital expenditure will be focused on the Douglas perfumeries. Having exited the markets in Denmark, the USA, and Russia, the perfumeries now have a country portfolio with a great deal of promising potential, which Douglas intends to exploit by opening new stores, modernizing the store network, and expanding online sales internationally. In the book sector, the Thalia Group is facing major challenges. In order to consolidate its leading position on the market, the already successful multi-channel strategy is being promoted quickly, additional product lines are being added, and the e-book business is being stepped up. In the jewelry sector, expanded service offerings — including online — and modernization should generate growth on the particularly important German market. In the fashion area, the reorientation with optimized product presentation and a selected expansion of the product range will be accompanied by intensive marketing and sales through the AC online shop. In the confectionery sector, the focus is on implementing the new store design concept.

[Text/Logo: Douglas]