Tom Tailor hails 2017 results, expects more growth ahead

By

Sandra Halliday

Published
Mar 20, 2018

Tom tailor was upbeat on Tuesday as it hailed a turnaround that’s currently running ahead of schedule with the “best after-tax result in company history”.

And that optimism certainly seems to be justified by a look at the figures. Net earnings last year hit €17.1 million, up from a loss of €73 million a year ago. And core earnings on an Ebitda basis powered ahead to €83.1m from €10.3m, as the Ebitda margin rose a healthy 7.9 percentage points to 9%.

The company has clearly focused on profits above sales growth and actually was prepared to let some sales pass it by rather than selling its goods too cheaply. That meant group revenue fell to €921.8 million from €968.5 million “due to the consolidation of the product, country and store portfolio in favour of profitability”. And wholesale slipped 0.5% to €350.1 million for the same reason.

But management was happy and CFO Thomas Dressendörfer said Tom Tailor is “therefore able to continue our path confidently.”

The company also said that its Bonita brand was more buoyant last year and that the Project Reset turnaround programme “has already had a significant positive impact” there. The company has focused heavily on Bonita product and also has cut 135 of its stores to end 2017 with a total of 815. It expects other specific initiatives for growth at the brand to make an impact in the second half of the current fiscal year.

As is clear by Bonita’s experience, the group turnaround has been achieved by a ruthless focus on streamlining its operations. This has seen it exiting low-margin product lines, as well as shutting stores and quitting under-performing markets, plus boosting supply chain efficiency and launching other efficiency drives.

A focus on digital has also been key with initiatives such as the group-wide transition to SAP and the new product development system PLM. Heavy use of data analysis has also helped and a more “modern, provocative look and unique identity” in its marketing has been important too. Viral marketing and new design collaborations (such as the one with German rock group Revolverheld) also helped raise brand awareness.

CEO Dr Heiko Schäfer hailed the positive result despite 2017 having been “a transformation year” when profits might have been expected to be weak.

But the important point is that its Project Reset is “almost complete” and this holds out the hope of more profits growth and sales growth to come.