Charles Vögele H1 net sales suffer with negative currency impact

Charles Vögele's results for the first half of 2015 were suffered because of tougher operating conditions. Group net sales fell 13.3 percent to 392 million Swiss francs (419.4 million dollars) due to the negative effect of exchange rates. After adjusting for exchange rates and like-for-like, the fall in net sales was 4.1 percent.

“The removal of the minimum euro exchange rate by the Swiss National Bank in mid-January caused a significant rise in price pressure in the Swiss home market and led to a massive, currency-driven fall in net sales from other regions,” explains Markus Voegeli, CEO of Charles Vögele Group.

On the cost side it helped that the euro was weaker than in the same period of the previous year. Operating costs fell by 24 million Swiss francs (25.6 million dollars) to 262 million Swiss francs (280.3 million dollars). Additional savings were not sufficient to compensate for the currency-related fall in sales. Operating earnings at the EBITDA level decreased to 11 million Swiss francs (11.7 million dollars) and EBIT to 29 million Swiss francs (31 million dollars). The net loss reached 36 million Swiss francs (38.5 million dollars) compared to 12 million Swiss francs (12.8 million dollars) last year.

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*The like-for-like fall in sales was primarily due to the Swiss home market, where net sales fell by 8.6 percent, or 7.5 percent after adjusting for floorspace changes. The removal of the minimum euro exchange rate greatly intensified price pressure in Switzerland and also led to a significant increase in shopping tourism. Charles Vögele also had to cope with a setback in its important Germany sales region. Net sales fell by 4 percent after adjusting for changes in exchange rates and floorspace. The crisis in German store-based fashion retailing continued during the period under review and led to a 2.5 percent decline in volume compared with the same period of the previous year.

The Benelux sales region (Netherlands and Belgium) reported net sales growth of 0.7 percent after adjusting for exchange rates and floorspace. In the CEE Sales Region (Central Eastern Europe: Austria, Slovenia, Hungary) there was a 0.8 percent fall in net sales after adjusting for exchange rates and floorspace.

During the last eight months, the company remodelled around 160 stores, according to the new store format strategy. In Switzerland nearly 50 percent of the 167 stores are remodelled up to now – nearly 100 in the other sales organizations. By the end of 2015, the company intends to complete the exercise in Switzerland. The remaining stores will follow by the end of 2017.

In mid-August the newly designed Charles Vögele Online Shop went live. The redesign strengthens the Group's "omni-channel" strategy in order to make better use of the potential of e-commerce. Charles Vögele will also be launching a new brand campaign in the autumn.

The company states that the second half of the year will remain challenging. Management's aim is to stop the decline in like-for-like sales compared to the previous year and generate a positive operating result (EBITDA) for 2015 as a whole.