Lafuma Group unveiled a major restricting plan after sharply marking down the value of its Oxbow action sports brand, reporting a 15.4 percent decline in sales and a net loss of €60.0 million for the six months ended March 31.
The French company said revenues decline 15.4 percent to for the first half of fiscal 2012-13 Operating loss for the period reached €4.3 million compared to a profit of €5.35 million euros in the first half of the previous fiscal year.
- A revised estimate for provisions on inventory and receivables of €11.7 million, to take into account the downturn of our markets and of the different Group activities;
- A total depreciation of the brand and residual goodwill of Oxbow of €37.1 million;
- A loss of €3.5 million for assets to be sold or abandoned.
Group profitability was deeply impacted by a decline in Oxbow sales (-35%) in a context of an overall boardsports-market decline and the consecutive aggravation of losses for the brand. Due to declines on all of its markets, the Lafuma outdoor activity (textiles, equipment and footwear) was also unprofitable. However, the furniture activity (under the Lafuma brand) as well as the Eider and Millet brands (apparel and mountain equipment) have continued to post operating profits, in an environment that is not as deeply impacted by the economic crisis.
Lafuma said it has established a new strategic plan designed to secure the future for activities and brands experiencing difficulties and to boost growth for those that are profitable. The plan would provide for a Group organization under three activity divisions:
- Outdoor and Mountain with the Lafuma, Millet and Eider brands centralized at the Annecy site.
- Furniture at the Anneyron site,
- Boardsports with the Oxbow brand at the Merignac site.
These three operating divisions would be entirely independent, only sharing logistics and IT services.
This new organization would make the Group more effective in employing its technical expertise for Outdoor and Mountain activities, and confirm its potential on the international front. At the same time, this operational autonomy would provide each division with the means to target the specific needs of its own market, brands and growth.
The Group confirmed it is moving ahead with plans to raise a significant amount of capital withiin the framework of a refinancing plan presently under negotiation with banking partners to finance the restructuring.
In conjunction with the plan, the Group told employee groups that it would transfer all the operations of its Outdoor Group from Anneyron to Annecy, where the Eider and Millet brands are based. The consolidation will entail the transfer of 46 jobs to Annecy and the elimination of 78 positions, including 60 in Anneyron. Anneyron would remain the central location for the Groups furniture activity.
Based on the order book for the 2013 Autumn-Winter collections, the decline in sales revenue will most likely continue, albeit at a slower pace over the second half of fiscal 2012-2013 and into the following quarter. This decline will significantly affect the Group result for fiscal 2012-13.
Actions to improve operating activities, cost-reduction measures, a concentration on profitable distribution channels and reorganization plans should lead to a gradual reduction in current operational losses of the Lafuma Group over upcoming fiscal years.
|in EUR millions||HY1 12/13||HY1 11/12 LFL*||Variation N/N-1 LFL*|
|Current operating result||(4.3)||5.3||(9.6)|
|Net result, group share||(60.0)||0.9||(60.9)|
|in EUR millions||HY1 12/13||11/12 LFL*||Variation N/N-1 CS*|
|Net financial debt||36.2||17.2||19.0|
*: LFL – Like-for-like comparison of sales (excluding Country and Ober activities)