Lafuma Group reported a profit for the first half of its fiscal year for the first time since 2007 despite flat sales thanks to tighter inventory and profit improvements at its Great Outdoor (Lafuma) and Mountain (Millet-Eider) divisions.
The French company said sales rose just 0.9 percent to €122.4 million ($172 mm) in the six months ended May 30, compared with €121.3 million ($161 mm) in the six-month period ended March 30, 2010. Gross profit reached €66.3 million ($93 mm), up 3.9 percent from €63.8 million ($85 mm) during the period. That raised gross margin by 160 basis points to 54.2 percent of revenue and drove an 88.9 percent increase in operating profits, which reached €1.7 million ($2.4 mm). EBITDA rose 26.1 percent to €5.8 million ($8.1 mm) while net income swung to €700,000 ($1.0 mm) from a loss of €2.5 million (-$3.3 mm) a year earlier. Net profits grew despite a €300,000 loss from the launch of a new joint venture in China.
The Great Outdoor division broke even during the period after losing €1.7 million a year earlier, while operating profits doubled at the companys Mountain division to €3.2 million. The surge in margins was attributed to fewer mark downs and improved expense controls, including lower debt payments.
Lafuma expects the sales growth to accelerate in the fourth quarter and result in a net profit for the full fiscal year. Sales growth is expected to accelerate again in the first quarter of fiscal year 2012.