The New Wave Group, the company behind Craft and Cutter & Buck, saw sales jump in the second quarter by 11 percent to 1,689 million Swedish kronor (€157.5m-$174.7m), or by 6 percent in constant currencies. However, earnings were affected by investments in growth initiatives.
The Swedish group recorded sales increases in each segment, but Sports & Leisure stood out, with revenues soaring by 17 percent from the corresponding period last year. The segment experienced growth in all regions, and its Ebitda rose by 16 percent to SEK 49.0 million (€4.5m-$5.0m).
Sports & Leisure accounted for about 40 percent of overall sales. Along with Craft and Cutter & Buck, the division includes the Seger and Ahead brands, along with the distribution of Speedo in Scandinavia, among other brands and activities.
The retail sales channel increased by 18 percent, while the promo sales channel advanced by 7 percent. In the corporate channel, sales increased by 7 percent, and they gained 5 percent in the Gift & Home Furnishing channel.
The management said it was satisfied with these results, especially as the company suffered from a negative calendar effect and a difficult comparison base with the year-ago quarter.
By region, the group's total turnover in Sweden advanced by 6 percent, while revenues from the U.S. jumped by 22 percent. Sales in other Nordic countries increased by 1 percent, and revenues in Central and Southern Europe rose by 8 percent and 13 percent, respectively. Sales in other countries climbed by 13 percent.
Overall, the gross margin declined by 0.7 percentage points to 46.5 percent, as the company faced increased costs related to investments in infrastructure and in developing its partnership with teams. The operating margin dropped by 1.9 percentage points to 7.1 percent and net income declined by 22 percent to SEK 83.7 million (€7.8m-$8.7m).
Looking ahead, New Wave said that it will focus on revenue growth, citing Craft and the successful investment it has made in teams and clubs. It noted that it already has agreements with several national teams within a number of different sports and also large well-known clubs in several countries. While sales growth is a priority, it expects to gradually raise the operating margin in the coming years.