Peak Performance saw its sales advance by 5.6 percent in constant currencies for the six months to the end of December, despite several store closures. The Swedish ski, outdoor and golf brand's turnover reached the equivalent of 585.9 million Danish kroner (€78.7m-$89.1m) for the half year, up by 3.6 percent.
The performance of the brand was report by its parent company, now called IC Group, as Peak Performance's chief executive, Nicolas Warchalowski, is preparing an updated strategic plan for the brand. Since a round of restructuring measures and divestments at the Danish company that owns Peak Performance, the Swedish brand has become an even more important part of the group's business. Warchalowski joined Peak Performance four months ago after five years as chief executive of Haglöfs.
The last three months of 2014 brought a more marked improvement, with sales increasing by 7.1 percent in constant currencies. The rise amounted to 5.1 percent in kroner to DKK 232.9 million (€31.3m-$35.4m) for the period, which is the second quarter in IC Group's fiscal year.
Peak performed most strongly in Norway, where it added two sales representatives. It has been expanding through partners such as Anton Sport as well as in casual wear stores and in ski resorts, through a partnership with Ski Star.
About 65 percent of Peak Performance's sales in the last full fiscal year came from the Nordic region, including a share of about 36 percent in Sweden. The brand will continue to focus on the Nordics, which Warchalowski regards as a market with substantial potential for the coming years. Germany and Italy have been among the strongest other European markets, which made up 31 percent of Peak Performance's sales for the last fiscal year.
Other markets made up just 4 percent of sales, chiefly through North America and distribution in Japan. The brand put an end to a brief distribution deal in South Korea two years ago and has started searching for a new partnership in China. The company had begun distribution in the Chinese market last year through YGM, a company in Hong Kong that owns Aquascutum and distributes several other brands, focusing on activewear. However, the agreement was ended this year as Peak Performance wants to establish broader distribution in China.
The brand's retail sales dipped by 3.4 percent to DKK 151 million (€20.3m-$23.0m) for the six months, including four store closures. Comparable sales in Peak Performance stores other than outlets increased in the first quarter but they declined due to the warm weather in the last three months of the year. They slid by 0.8 percent for the half-year. This was entirely due to lower sales in standard stores, while online sales were on the rise.
Peak Performance is preparing for the launch of a new online sales platform across the entire IC Group in April, for deliveries in the European Union, Norway and Switzerland. French will be added to the language options, which currently include only English and German, and shipments to other markets will start in the autumn. The company wants to take advantage of synergies stemming from a group-wide platform, and lowered operating costs. Peak Performance also wants to increase its share of own retail sales through a few store openings. For a start it will open another brand store in August in Oslo, where it already has two single-brand stores and one outlet. Elsewhere, the company is moving to more judicious locations.
Exchange rate changes, heavier discounts and a smaller share of sales derived from own stores led to a decline in the brand's gross margin. However, the drop was outweighed by a reduction in capacity costs: Operating profit (Ebit) advanced by 12.8 percent to DKK 103.1 million (€13.8m-$15.7m) and the brand achieved an operating profit margin of 17.6 percent, up by 1.4 percentage points for the six months.
The IC Group as a whole lifted its sales by 3.3 percent to DKK 1,425.8 million (€191.5m-$216.7m) for the half-year, which was an increase of 5.5 percent in constant currencies. The turnover encompasses the continuing operations of the group, consisting of Peak Performance, Tiger of Sweden, By Malene Birger and a small share of non-core business.
The gross margin for the group's continuing operations reached 55.1 percent for the half-year, down by 2.1 percentage points, due to non-recurring costs as well as the factors indicated above for Peak Performance. The group's operating profit dipped by 2.4 percent to DKK 162 million (€21.8m-$24.6m), and profit for the six-month period shrank by 21.5 percent to DKK 107.4 million (€14.4m-$16.3m). For the full financial year, the company predicts sales from continuing operations in the range of DKK 2,600 to 2,650 million (€356.0m-$402.7m) and operating profit of about DKK 170 to 210 million (€28.2m-$31.9m).
An important part of Warchalowski's task so far has been to stabilize Peak Performance's management, after three changes in chief executives in less than three years. Among the latest departures was that of Joacim Sjödin, former European sales director at Peak Performance who moved last November to Björn Borg, where he became global sales director. The chief executive of Björn Borg is Henrik Bunge, who held the same job at Peak Performance for less than two years until October 2013.
Under a new management structure, the supervision of European sales has been split between two other managers. Martin Netinder, who already handled export markets and Canada, will supervise all European markets other than the Nordics. The Nordics have gone to Anders Rydgren, who was previously in charge of wholesale sales and has retained that job along with the Nordics function. Export markets have been supervised since the start of February by Jenny Fingal, reporting to Netinder. Previously in charge of international sales of Gant watches, she replaces Flemming Kruse Henriksen, who has left Peak Performance.
While the brand's business plan for the coming years has yet to be finalized, it should focus on building up market share in the Nordics and expanding in Alpine countries. The brand's platform has been repeatedly tweaked in the last years but Warchalowski apparently wants to cultivate the mix of ski, outdoor, golf and casual wear that distinguishes Peak Performance. Ski and outdoor ranges each accounted for about 25 percent of the brand's turnover in the last full fiscal year, compared with 22 percent for casual and 5 percent for golf.
