The New Wave Group, the company behind Craft and Cutter & Buck, saw sales jump in the fourth quarter by 4 percent to 2,024 million Swedish kronor (€183.6m-$201.0m), or by 1 percent in constant currencies. This is the highest sales level that the Swedish company has ever recorded in a quarter.
The quarterly gross margin inched up by 0.3 percentage points to 46.7 percent, while the operating margin gained 1.1 percentage points to 11.9 percent. Net income rose by 4.4 percent to SEK 165.9 million (€15.0m-$16.5m). The management said efforts to prioritize costs, earnings and cash flow bore fruits, despite the negative effects of the warm weather on sales of winter products.
In the Sports & Leisure segment, the group’s revenues progressed by 3 percent from the corresponding period last year to SEK 771.7 million (€70.0m-$76.2m). The segment experienced growth in all regions, except in the U.S. Ebitda rose by 36.5 percent to SEK 115.2 million (€10.4m-$11.4m). Along with Craft and Cutter & Buck, the division includes the Seger and Ahead brands, as well as the distribution of Speedo in Scandinavia, among other brands and activities.
The retail sales channel remained flat while the promo sales channel advanced by 7 percent, driven by the Corporate and Sports & Leisure segments. In the Corporate channel, sales increased by 7 percent, and they fell by 5 percent in the Gift & Home Furnishing channel.
By region, the group’s total turnover in Sweden declined by 1 percent, weighed down by the promo sales channel. Revenues declined in the U.S. by 5 percent, although they improved in terms of local currencies. Sales in other Nordic countries rose by 4 percent, and revenues in Central and Southern Europe jumped by 10 percent and 8 percent, respectively. Sales in other countries climbed by 10 percent.
For the full year, New Wave’s revenues jumped by 10 percent to SEK 6,903 million (€626.3m-$685.1m), or by 5 percent in constant currencies. The group recorded growth in all quarters, regions and in both sales channels. The group’s gross profit margin inched down by 0.2 percentage points to 46.4 percent, while the operating margin remained flat. Net income advanced by 2.8 percent to SEK 370.1 million (€33.6m-$36.7m).
The management said that the demand for the group’s products and services is expected to be significantly reduced for all operating segments during the remainder of the first calendar quarter of 2020, due to the current pandemic.
Canceled sporting events and high stock volumes at retail resulting from the warm winter are expected to affect the segment’s sales negatively, along with fewer visits to physical retail stores. The risk of increased bad debt expenses is considered significant. The group said is currently taking a number of actions to reduce costs and minimize the effects of the virus outbreak.