Macintosh Retail Group, owner of Pro Sport stores in the Netherlands, managed to roughly uphold the sales of its fashion division last year excluding the acquisition of Brantano, the Belgian and British shoe retail chain. The division lifted its sales to €612.8 million, up from €339.2 million in 2007, and excluding Brantano they declined by less than 1 percent.
This business comprises 32 Pro Sport sneaker stores in the Netherlands, along with Brantano and Scapino, a Dutch shoe discount chain, and Dutch stores under the Dolcis, Invito and Manfield banners. Macintosh declined to provide details on the performance of Pro Sport alone.
Brantano suffered a sales decline of about 12 percent to €274.3 million in 2008, its first year under the ownership of the Macintosh Retail Group (although the acquisition became effective on Jan. 23, the reported figures cover the full year). A drop of €22 million could be attributed to exchange rates, which affected reported sales of Brantano’s U.K. stores.
Furthermore, Brantano’s operating profit was hit by one-time costs of €5.2 million relating to integration measures, a provision for loss-making stores in the U.K. and impairment of assets in the country. One of the major changes was that Brantano’s management was decentralized, with separate managers in Belgium and the U.K., while the international structure based in Belgium was dismantled.
Due to a much improved performance in the second half, Brantano reported a slightly positive operating result last year. But adding financing costs for the acquisition, Brantano still contributed a net loss of €6.3 million for the year.
The Macintosh Retail Group also includes the Halfords bicycle chain, which contributed to a sales decline of 3.4 percent in the group’s automotive and telecom division last year. Adding the furniture division, the group’s sales came to €1,186.5 million, up by nearly 29 percent due to Brantano, and down by 0.8 percent without the newly acquired shoe chain.
After a rough first half, Macintosh Retail Group took many measures to improve its product mix and inventory management. It therefore managed to lift its gross margin by 2.4 percentage points to 45.3 percent for the year. The fashion division even managed to increase its operating profit in the second half.
However, due to one-time expenses reaching €12.7 million, for Brantano as well as loss-making stores in other divisions, the Macintosh group’s operating profits dipped to €54.1 million, down from €66.9 million in 2007. Excluding these expenses, operating profits would have been roughly flat for the group in the second half. The company ended the year with a much reduced net profit of €31.3 million, compared with €47.5 million in 2007.
The company stressed that it would continue to invest very conservatively this year, with few store openings in its fashion division. It declined to provide detailed guidance for this year, but pointed out that Scapino would seek opportunities to expand its discount formula in the tough market circumstances prevailing in the Netherlands, perhaps by launching smaller stores.
When it comes to Brantano, the measures implemented in 2008 are expected to yield cost savings of about €3 million on an annual basis. Macintosh Retail Group’s managers expect that, including financing costs, Brantano will make a positive contribution to its net profits this year.
