With six added stores, Peak Performance saw its turnover move up by 1.5 percent to the equivalent of 348 million Danish kroner (€46.8m-$49.5m) for the quarter until the end of September but its Ebit margin contracted by 4.9 percentage points to 17.8 percent for the three months, as it spent more on stores and other sales-related costs.
The growth in the Swedish outdoor, ski and golf brand's turnover was chiefly attributed to growing online sales and higher outlet capacity in the quarter, which is the first in its fiscal year. The brand had 39 stores at the end of September, up from 33 at the same time last year – although none were added during the quarter itself and the brand closed an outlet in Metzingen, in Germany. This enabled Peak Performance to raise its retail sales by 7.2 percent to DKK 74 million (€9.95m-$10.52m) for the quarter but its comparable store sales were off by 2.9 percent. The drop was blamed on lower traffic, particularly in September, because of the unseasonably warm weather.
Peak Performance's wholesale and franchise turnover was flat at DKK 274 million (€36.8m-$39.0m) for the quarter. However, this included a negative impact of DKK 15 million from a shift in the timing of deliveries. The outdoor brand's sales were up by 1.5 percent in the Nordic markets, with increases in all of them other than Sweden. Sales were up by 1.7 percent in the rest of Europe and by 6.3 percent outside of Europe.
The decline in the profit margin was blamed on the rise of costs for the new stores and other sales-related items. The comparison with the same quarter in the previous fiscal year is also distorted due to the fact that it included a positive impact of DKK 8 million (€1.08m-$1.14m) from the timing of deliveries – without that, the cost ratio increased marginally.
The entire IC Group, which encompasses Peak Performance along with Tiger, By Malene Birger and other brands, raised its sales by 0.9 percent to DKK 851 million (€114.4m-$121.0m), an increase of 1.8 percent in constant currencies. It was widely affected by low retail traffic, leading to a 6.6 percent decline in comparable store sales.
The Danish group's gross margin slipped by 0.5 percentage points to 56.1 percent, although it would have been flat excluding one-off items. With a rise in capacity costs of DKK 28 million (€3.76m-$3.98m), the Ebit margin slumped to 15.9 percent, down from 19.3 percent for the same quarter last year. The company's net profit landed at DKK 105 million (€14.1m-$14.9m), down by DKK 29 million (€3.90m-$4.12m).
IC Group continues to forecast a sales rise of at least 6 percent in constant currencies for the year, which would amount to at least 5 percent in reported terms. The company anticipates growth in wholesale pre-orders of about 7 percent for the remainder of the fiscal year, along with the opening of 15 to 20 stores – compared with plans of 10 to 15 store openings outlined at the start of the fiscal year. The Danish group further reported some improvement in retail sales at the beginning of the second fiscal quarter, including comparable sales growth, leading it to forecast flat comparable retail sales for the remainder of the year.
However, IC Group has slightly downgraded its forecast for operating margin to between 8 and 9 percent, compared with a previous forecast of approximately 9 percent. Due to the tough retail climate, the group reports a potential negative impact on its high-margin sales from stationary stores. Complementary sales to wholesale customers would add to the pressure on gross margin and have a negative effect on the group's cost ratio.