Calida Group: Weak Euro Complicates Turnaround at Lafuma and Oxbow

Calida Group reported the strength of the Swiss franc and the U.S. dollar against the euro complicated turnaround efforts at its Lafuma outdoor and Oxbow board sports brands in the first half.

Sales of the Millet Mountain Group, which encompasses the Millet, Eider and Lafuma outdoor brands, fell 22.9 percent to CHF38.9 million, or $40 million. Millet and Eider each grew sales by CHF 1.0 million, or 0.3 percent and 0.8 percent respectively, while sales fell 34.8 percent at Lafuma, as expected. Operating profits tumbled 55.7 percent to CHF3.40 million, $4 million, but executives attributed some of the decline to big investments made restructuring Lafuma’s sales organization ahead of the critical second half. As a supplier of equipment for mountaineering, skiing and outdoor pursuits, the Millet Mountain Group earns about 61 percent of its sales in the back half.

At Oxbow, a board sports apparel brand that derives 90 percent of its sales from France, sales slid 25.4 percent to CHF 14.4 million, $15 million, which translated to a 13.9 percent decline in euro terms. Operating profits were nearly halved to CHF 2.2 million, $2 million, representing a decline of 40 percent in euro terms. Based on new orders, Calida is forecasting the brand will see sales continue to decline in the second half.

Calida Group, which also makes undergarments, sleepwear and other apparel, reported total sales fell 14.8 percent to CHF 168.1 million, $178 million, but were up 4.8 percent in currency neutral terms.

The company, which derives 75 percent of its sales from the euro zone, said the 14 percent devaluation of the euro against the Swiss franc and the 20 percent devaluation against the U.S. dollar, knocked about CHF 19.8 million, or $21 million, off its sales and CHF 3.9 million, $4 million, off its profits in the first half.

“Turbulences on the foreign-exchange markets and the cyclical weakness, especially in the southern European markets, have resulted in subdued consumer demand for textiles,” CEO Felix Sulzberger and Chairman Dr. Thomas Lustenberger wrote in a letter to shareholders. “Considering our order book and the view we take of the markets, our overall assumption for the second half of the year is that developments will be similar to the first half.”