Globe Intl., bolstered by a shift in key product focus to footwear and apparel, generated improved H1 results that included stronger profitability and cash flow from operations for the six months ended Dec. 31. The Aussie group reported a net profit of A$4.9 million (€3.0m) against a loss of A$0.2 million in the year-ago period despite a 10.4 percent drop in total sales to A$108.0 million (€65.5m) that was impacted by lower inventory clearance activity in Europe and North America. Sales from the company’s apparel and footwear brands were either flat or modestly up during the period. The improved profitability, meanwhile, was attributed to strong turnarounds in both Europe and North America and a stable profit contribution from Australia.
Ebit improved by A$6.4 million year-over-year to A$7.3 million (€4.4m), helped by an improved gross margin and lower costs. Lower inventory clearance and lower freight costs combined with favorable currency tailwinds and execution of product initiatives contributed to the improved gross margin. Cash flow from operations reached A$16.5 million (€10.0m). At H1 end, the company had A$20.0 million in cash versus A$10.7 million at the end of the year-ago period and had reduced its working capital by A$11.2 million.
“During the half-year, we saw margins improve, cost base rationalized, and significant continued investment in our key growth brands of Salty Crew, FXD and It’s Now Cool,” said CEO Matt Hill in a statement.
The lower H1 costs were achieved through improved operating efficiencies, a restructuring of the European division, and the rationalization of underperforming brands.
Shift in focus
The group, anticipating positive contributions from all operating divisions and key brands in H2, has been working to make hard goods a lower percentage of overall revenues to ensure less volatility in its financial performance. Since 2017, when one-third of A$150 million in total revenues was generated by more than a dozen micro hard goods brands, Globe has strategically moved away from its reliance on hard goods sales and multiple small hard goods brands to a revenue base of more stable global apparel and a handful of larger hard goods brands. Globe and Impala are the company’s only hard goods brands of scale today.
