ECCO reported revenue fell by 6% in 2009 DKK $5.04 billion ($912.7 million) while pre-tax profits fell by 38% to DKK 460 million ($83.2 million) due partly to significant investment in retail stores and in-store shops. Said the Danish-shoe maker in a statement, “The global financial crisis affected sales, but under the prevailing conditions the profit is acceptable. At the end of 2009, ECCO was in the strongest financial position ever and continued its expansive development of the retail sector throughout the year.”
Inventories were reduced by 21% and its cash flow was substantially improved, which strengthened ECCO’s financial stability. At the end of the year, ECCO’s solvency ratio had increased from
56% to 58%.
“Like many ther companies, ECCO experienced a challenging 2009. The drop in consumer spending among our key markets, particularly in the US and Russia, slowed our performance. However the positive growth we experienced in China, Australia, Poland and Canada demonstrates the strength of our global platform,” says CEO Dieter Kasprzak. “ECCO worked through the challenging market conditions and continued its expansion strategy by opening 140 new stores, bringing the worldwide total to 901 stores. ECCO also extended its global presence by increasing the number of shop-in-shops to 1,278.”
In 2010, ECCO said it expects modest growth in revenue and profits during the coming year, which will still be affected by the global financial crisis.
In its annual report, ECCO said the principal problem in 2009 was “the rapidly falling revenue in key markets, such as the U.S. and Russia, which were further affected by the powerful swings in currency exchange rates. This is where ECCO’s wide geographical spread proved to be an advantage, since the Scandinavian and Central European markets stabilised during the course of the year, while ECCO experienced growth in Asia, Poland and Canada. The slowdown in economic activity meant that ECCO made an adjustment to production capacity as early as the beginning of 2009 and reduced costs throughout the business, except in the sales area.”
ECCO also responded to the weaker environment opened 140 new stores, making a total of 901 stores. At the same time, ECCO increased the number of shop-in-shops to 1,278. In total, ECCO invested over DKK 129 million ($23.3 million) in new stores, marketing and sales promotion measures.
Regarding products, ECCO noted that the BIOM running collection “was very well received on the market and will be extended with additional models in 2010.” In 2009, ECCO also opened a large new development centre in Thailand in order to complement ECCO’s Research & Development Centres in Denmark and Portugal.
