Swiss mountaineering brand Mammut is focusing on cutting costs to counter currency headwinds and a “general weakness” in the outdoor market that slowed growth in the first half compared with a year earlier.
Mammut revenues slid 4.2 percent to CHF99.3 million ($105 mm) in the first half ended June 30, after exchange rates trimmed a 1.2 percent increase in currency-neutral sales by 5.5 points, according to Conzetta AG, a Swiss conglomerate that owns Mammut.
Negative EBIT of CHF 5.9 million (-$6 mm), dragged EBIT margin to -6.0 percent, compared with CHF 1.5 million and 1.5 percent a year earlier. While Mammut's sales and EBIT are weighted to the back half of the year, Conzetta reported, “a general weakening of growth in the outdoor activities market worldwide. Moreover, Mammut has to cope with high pressure on margins due to the impact on revenue of the adverse currency situation, as well as to purchasing chiefly in U.S. dollars. This weakens the starting position of the business in its core markets in the eurozone.”
Margin pressure also came in Switzerland, where merchants are turning to discounts to woo back Swiss consumers who are increasingly making their purchases in lower-priced markets abroad. “In response to these tougher conditions, Mammut is adjusting its cost structures and reducing complexity,” Conzetta reported.
Conzetta, which also operates segments in Sheet Metal Processing, Chemical Specialties, Systems Engineering and Real Estate, does not expect a significant change in the economic environment in the back half of the year.
“Although the relevant markets for the Group, such as the U.S.A. and Central and Northern Europe, showed an improved performance in the first half, significant uncertainties remain,” the company said. “For instance, the continuing difficulties in the slowdown of growth in China and the strength of the Swiss franc.”
For the second half of the year, Conzetta expects the business performance of the Sporting Goods segment to improve thanks to seasonal factors, while the relevant outdoor activities markets will remain subdued. It plans to open more mono-branded stores to improve margin.
