The Lafuma Group ended fiscal 2004 with solid sales and profit growth, and a large improvement to the company’s debt-to-equity ratio. Fiscal year sales increased 2.0% to €179.9 million ($219.0 mm) compared to €176.4 million ($191.2 mm). Net profit outpaced sales with a 6.9% increase to €8.1 million ($9.9 mm) versus €7.6 million last year.

Lafuma’s operating profit margin fell 90 basis points to 8.2% of sales, or €14.8 million ($18.0 mm) compared to fiscal 2003 when the company posted a 9% operating margin at €15.9 million ($17.3 mm).

Lafuma’s alpine brand, Millet, led the way in profitability with a 90 basis point improvement in its operating margin to 11.4% of sales. This was offset by the Lafuma brand’s operating margin, which fell 30 basis points to 8.2% of sales and the Le Chameau brand’s operating margin, which fell 280 basis points to 6.9% of sales.

LaFuma overcame a drop-off in its key French market with a 15.2% increase in footwear sales, a 20% increase in sales in the Asian region and the contribution of the recently acquired ‘Ober’ brand. The French decline was primarily due to a leading retailer’s move to more private label. Management also said that the brand experienced a decline in German business, but this was “in line with the market.”

The company’s Le Chameau brand saw a 3.2% decline in sales due to “internal factors that have already been corrected,” a slow-down in international growth, and adverse weather conditions. The company’s Millet brand experienced 14.5% sales growth.

International sales are now considered to be LaFuma’s primary source of growth because of stronger organizations in Asia, Europe, and North America. Lafuma management said that International growth this year was at 6.5%, exceeding market growth in all regions.

Fiscal 2005 is again expected to show solid sales and profitability growth across all three brands, according to company guidance. The Lafuma brand is expected to continue its expansion into the footwear category and international growth, while Millet and Le Chameau are expected to show sales growth “across all product families and in all major countries served.”

Profitability increases are expected to be driven by Lafuma’s international subsidiaries and Le Chameau. The Group also said that it will “initiate a new phase of growth by acquisition, supported by organic growth and the strength of its fundamentals.”

With the company’s debt to equity ratio improving to 43% compared to 67% last year, funding acquisition opportunities should not be a problem.