Adhoc News
Charles Vögele Group clears balance sheet:
Dutch goodwill written off – unchanged pay-out policy
Clothing retailer Charles Vögele Group has decided to write off all CHF 74 million of the Netherlands Sales Organization's goodwill. This one-time write-off will not have a negative impact on the group's future development and its ongoing earnings power. After the write-off Charles Vögele Group will still have a solid equity capital ratio of 55%. The group operating earnings (EBITDA) of CHF 90 million achieved in the second half of 2006 are only slightly below the best semester result of the last five years. The shareholder-friendly pay-out policy will remain unchanged and the Board of Directors will propose to the upcoming Annual General Shareholders’ Meeting another reduction in par value of CHF 2.00 per share.
Goodwill from the Kien acquisition is being written off
The CHF 74 million of goodwill that is being written down comes from the acquisition of the Dutch Kien Group by Charles Vögele (Netherlands) B.V. in 2001. The Board of Directors and Group Management decided to take this action because in 2006 the target of breaking even at the EBITDA level in the Netherlands was not achieved despite ongoing improvements made. However, the Charles Vögele Group is still committed to The Netherlands and intends to grow organically in this market in the years to come.
Reinhard: "The company is on a solid footing"
"By clearing the balance sheet we do not impact the solid financial base of the Group," said the CEO of Charles Vögele Group, Daniel Reinhard. "We will now concentrate on our expansion in the existing and the new markets and on further improving profitability in our Sales Organizations."
Preview of the unaudited 2006 financial statement:
Sales in the second only partly compensate the decline seen in spring
In the second half of 2006, Charles Vögele Group managed to increase its sales by 2% year-on-year. The generated operating earnings before depreciation (EBITDA) of approximately CHF 90 million are only slightly lower than the best semester result achieved in the last five years.
Overall, the Charles Vögele Group generated net sales of CHF 1 324 million in 2006, a decline of about 1.8% on the CHF 1 348 million posted in 2005. Gross profit for the period under review came to CHF 818 million (previous year CHF 822 million), with the gross profit margin improving to 61.8% (previous year 61.0%). Operating earnings before depreciation (EBITDA) came in at CHF 143 million (previous year CHF 165 million), giving an EBITDA margin of 10.8% (previous year 12.3%). After deducting depreciation, this left operating earnings (EBIT) at CHF 86 million before write-off, compared with the previous year's CHF 109 million. The Group's net profit for 2006 before write-off was CHF 55 million (previous year: CHF 70 million). After allowing for the goodwill write-off of CHF 74 million, this leaves a group loss of about CHF 20 million. With an equity capital ratio of 55% the Group has still a solid financial position.
Pay-out by another reduction in par value of the shares proposed
Owing to the company's earnings power and the resulting healthy financial situation, the Board of Directors is proposing to the Annual Shareholders' Meeting of 4 April 2007 that there should be a further reduction in the par value of Charles Vögele Holding AG shares of CHF 2.00 per share.
Outlook for 2007 financial year
During the current 2007 financial year, Charles Vögele Group will concentrate on increasing the pace of growth and on the sustainable improvement of operating results at all Sales Organizations. Thus, for example, Hungary has already been definitely established as expansion market. In order to accelerate expansion an overall investment volume of about CHF 100 million is envisaged.
The forecast already communicated for 2005-2007 with regard to the EBITDA margin remains unchanged. The company still expects sales to develop in line with, or slightly better than, the general market.
Detailed and audited information on the 2006 financial year will be made public at the regular results press conference on 6 March 2007.
Charles Vögele Group AG
Charles Vögele Holding AG is a major independent European fashion retailer with 809 branches in Switzerland, Germany, Austria, Belgium, the Netherlands, Slovenia and Hungary, as well as in the Czech Republic and Poland. It employed a total of 7 370 people in the 2006 financial year. Charles Vögele Holding AG’s shares are quoted on the SWX Swiss Exchange (ticker: VCH; Bloomberg VCH SW; Reuters VCHZ.S).
Pfäffikon, 1 February 2007
For further information, please do not hesitate to contact:
Renzo Radice
Head Corporate Communications & Investor Relations
Charles Vögele Trading AG
Gwattstrasse 15
8808 Pfäffikon
Tel.: +41 (0)55 416 71 11
Fax: +41 (0)55 416 12 82
Email: renzo.radice@charles-voegele.com