By Thomas J. Ryan

Helly Hansen, which was undergoing a cash crisis at the start of 2015, scored a major turnaround last year.

Revenues for the Norwegian ski and sail brand rose 22.4 percent in its year ended December 31, to NOK2.57 billion ($305 million). On a currency-neutral basis, sales rose 12 percent, accelerating from a 5 percent gain in 2014. The sales gain came despite “a difficult trading environment, particularly in Europe,” where Helly Hansen grew its position in its core channels, regions and categories on a full-year basis.

EBITDA jumped 62.7 percent to NOK166 million ($19.7 mm). Gross profit improved 16.1 percent to NOK1.08 billion ($128.4 mm) although gross margins shrunk as a percentage of sales to 42.2 percent from 44.5 percent as a result of an inventory clearance initiative and the strength of the U.S. dollar, which is its main currency for product purchases. SG&A expenses were cut to 35.8 percent of sales from 39.7 percent.

The net loss was reduced to NOK298 million ($35.4 mm) from NOK614 million. The latest year included an impairment charge of NOK18 million ($2.1 mm) versus a charge of NOK364 million a year ago. Restructuring and non-recurring charges amounted to NOK95 million ($11.3 mm) in 2015, versus NOK22 million in 2014.

The turnaround was led by Paul Stoneham, who took over as CEO in January 2015. Stoneham had previously served as CEO of GHD, the haircare company, and he also had held several brand/category management roles for Procter & Gamble in North America and Europe.

Helly Hansen’s former CEO, Peter Sjolander, led the business through a successful turnaround over his eight-year tenure that included challenging economic conditions but eventually led to an expansion phase, taking the brand into new territories and product areas. Shifting from largely an export/distributor based international business to more of a local approach, Helly Hansen saw dramatic gains in the U.S. and Canada during 2013 and 2014. It also significantly expanded its product offerings over the last decade

But the brand wound up overstretching itself with moves such as a rapid expansion of its store base in North America and faced a liquidity crisis.

Following his appointment and working with its board, an operational and financial review was undertaken, which resulted in the exit of non-profitable businesses, clearance of obsolete inventory, clean up of legacy financial issues, the revoking of brand licenses, accelerated store closures and the introduction of a new senior management team. The company also scaled back its product lines by a quarter to focus on best sellers.

“We focused on the basics of getting cash in as quickly as we could,” Stoneham told the Financial Times.

“Quite frankly the first three to four months weren’t particularly pleasant,” he added. “We’ve taken the business from being a sales-driven company in the last 10 years to a more consumer-focused one.”

During the period, Ontario Teachers’ Pension Plan (Helly Hansen’s largest shareholder) increased its equity position by acquiring the equity of the minority institutional shareholder, while also supporting Helly Hansen in the repurchase of its public bond in full. Teachers’ first invested in the company in 2012, buying a three-quarters stake from the Nordic buyout group Altor.

As a result, Helly Hansen’s net working capital was reduced to 31 percent of sales at the close of the year from 52 percent at the close of 2014. Operating cash flow improved by NOK591 million ($70.2 mm) to NOK117 million ($13.9 mm) versus a cash flow deficit of NOK474 million in 2014.

The company said it is now embarking on a new growth strategy.

“Following a period of sales led expansion, we are now building a more consumer centric company with a new growth strategy that focuses the business on six categories, core geographies and the right channels to present our brand,” said Stoneham in a statement. “This will enable us to deliver sustainable growth well ahead of the market, building Helly Hansen’s position as a leading global technical outdoor brand. Our 2015 results, and early 2016 performance, provide some early evidence that the new focus on the core will allow the team to deliver sustainable healthy growth.”

Tapping into Helly Hansen’s 139-year Norwegian heritage, the new growth strategy is based on the ethos: “Helly Hansen makes professional grade gear to help people stay and feel alive.”

Plans call for the brand to refocus on core categories, countries and channels; strengthen its brand awareness with professionals; and build on its position as a leader in providing technical performance products in the mountains and on the sea, led by skiing and sailing while also building a premium position in mountain, base-layer, urban and work-wear. Another continued focus will on building a consumer-centric organization through investments in brand development and innovation, funded by improved financial performance and a leaner supply chain.

For the current year, Helly Hansen expects to continue its positive momentum with growth in sales and EBITDA across sport and workwear, supported by strong bookings. Due to the decision to focus on core categories, including the reduction of the product line by 25 percent over the next 18 months, a slowdown in organic revenue growth to mid-single digits is anticipated, but growth is estimated to be “well ahead of the market by late 2017.”

Photo courtesy Helly Hansen and Ambassador Mats Grimsaeth