Calida Group Says Rapid Rebound at Lafuma Fueled 2014 Profit Growth

Switzerland's Calida Group reported net income more than doubled in 2014 thanks to a quicker than expected turnaround at Lafuma Group, a French maker of outdoor and action sports apparel and gear it acquired in December, 2013.

Calida, whose primary business prior to the acquisition was intimate apparel, reported net sales doubled during the year to CHF$412.4 million and net income increased 122.6 percent to CHF$23.6 million. The equity ratio increased from 49.2 percent to 53.8 percent.

“Thanks to our Group's solid performance during the last financial year and the rapid integration of our major acquisition Lafuma, we are financially and operationally well placed to succeed and continue expanding in extremely competitive markets made even more challenging by volatile currencies,” said CEO Felix Sulzberger.

Calida's net sales increased 99.8 percent during the year under review from CHF$206.4 million to $412.4 million, due primarily to the Lafuma Group, which was consolidated fully for the first time into Calida's results. Calida said all three Lafuma divisions performed well and . The turnaround of the Lafuma Group, which had been making a loss, was achieved ahead of schedule.

The operating result (EBIT) after non-recurring effects increased by 29.5 percent from CHF$21.0 million to CHF$27.2 million. The return on sales came to 6.6 percent (previous year: 10.2 percent).

Net income went up from CHF$10.6 million to $23.6 million. Despite a one-time cash outflow of CHF$10.5 million caused by the restructuring of the Lafuma Group, the operating cash flow of CHF$19.5 million was virtually unchanged compared to prior year.

Calida ended the year with an equity ratio of 53.8 percent, up 460 basis points from a year earlier. The company remained net debt-free with net cash and cash equivalents of CHF$31.2 million.

The sharp increase in Calida Group's size necessitated organizational and management changes. The Group is now structured into five divisions: The Calida Division, based in Sursee, Switzerland; the Aubade Division based in Paris; the Millet Mountain Group with its Millet, Eider and Lafuma Outdoor brands, based in Annecy, France; the Furniture Division based in Anneyron, France; and the Oxbow Division based in Bordeaux, France.

Alongside the wholesale business, which remains the Group's mainstay, around 30 percent of sales are already coming directly from end-consumers via the retail, outlet and internet channels.

The Lafuma acquisition has allowed the extension of commercial activities to Asia and the expansion of product segments into the areas Outdoor and Furniture.

Outlook: Currency movements to narrow profits
The sharp increase in the value of the Swiss franc and the significant weakening of the euro against the US dollar, together with worsening economic weakness especially in Southern Europe and France, present the Calida Group with major challenges in the current financial year. The Group generates around 75 percent of its sales and earnings in euros.

The weakness of the euro against the US dollar also has a substantial impact on the Calida Group. Production and procurement costs accounting for around 17 percent of total group costs are denominated in US dollars, while sales revenues are mostly in euros.

Measures have already been initiated to mitigate the negative currency developments as much as possible. Nevertheless, much lower operating results are to be expected for 2015 if the currency situation does not significantly improve.