Kering, the French conglomerate that owns Puma and several luxury brands, reported that Volcom and Electric recorded combined revenue of €113 million in first-half 2014, down 0.4 percent in euro terms but up 0.4 percent on a currency-neutral basis.
Against a backdrop of ongoing tough market conditions for surfwear and action sports, Kering said Volcom reaped the benefits of the initiatives launched in 2013 to safeguard its margins, improve its distribution and more effectively harmonize its product offering, especially women’s collections. In light of these factors, wholesale sales held firm and sales in directly-operated stores (accounting for 14 percent of the total) rose sharply.
Sales for Volcom’s Apparel category contributed some 82 percent to the brand’s revenue for the period and were up compared to first-half 2013, fueled by a good showing in the second quarter. In North America which is still the brand's main market, representing 64.2 percent of its revenue sales rose once again (up 2.6 percent), propelled by a gradual recovery in revenue generated with third-party distributors.
Volcom also registered solid growth in Japan and emerging markets but revenue trends remained negative in Western Europe. Electric reported comparable-basis sales growth of over 20 percent in the first six months of 2014, powered by the brand’s major repositioning drive in the accessories market and the complete overhaul of its offering around new ranges of sunglasses, snow goggles and watches.
As in first-half 2013, Volcom and Electric's combined recurring operating income was €100,000 against break even a year ago. EBITDA was €1.8 million, down from €2 million. As a reminder, these brands' businesses are “extremely seasonal and their recurring operating income is much higher in the second half of the year,” Kering noted.
As of June 30, 2014, Volcom's directly-operated store network (Electric does not have any directly-operated stores) comprised 51 stores, including 10 in emerging markets. Volcom and Electric's gross operating investments totaled nearly €5 million in first-half 2014, representing a €2 million increase on the same period of 2013.
