HIGHLIGHTS FROM 2015 Business performance During 2015, ECCO grew sales and profits above 2014 levels. The increase in turnover was secured through higher investments in shop openings and other sales channels, and by launching new and innovative collections. The growth in profit, albeit somewhat depressed by the continuing problems in the Russian market, was improved by increasing efficiency in the production and supply chain, and through a stringent focus on operational costs. ECCO also decided to make a significant investment in growth. Net revenue was EUR 1,256m, an increase equivalent to 7.4%, compared to 3.4% in 2014. Profit before tax was EUR 183.5m, an increase equivalent to 4.0% against 6.6% in 2014. This produced a profit ratio of 14.6%. Total assets increased from EUR 924.7m to EUR 948.4m. Equity increased from EUR 532.2m to EUR 579.4m. ECCO’s solvency ratio was 61.1% against 57.6% in 2014. The return on equity was 20.6%. ECCO’s decision in 2014 to pursue a more expansive strategy was realised in 2015. ECCO invested in retail, e-commerce, and technology platforms facing customers and consumers. This led to solid growth in all areas of activity – wholesale, retail, and e-commerce – and across all ECCO’s regions. Investments grew from EUR 43.7m to EUR 51.5m. ECCO and its partners opened 174 shops during 2015 and closed 91, bringing the global total to 1,309 shops. Furthermore, a net of 172 shop-in-shops were opened, increasing the total to 2,018 by year-end. ECCO’s new Branding organisation delivered several new and successful products in 2015. This was mostly achieved using ECCO’s DRIVE programmes, which feature shorter launch times and tightly focused marketing spending. These DRIVE programme launches were used for products including ECCO COOL, SOFT 7, and INTRINSIC, which all attracted both existing and new customers. ECCO’s leather goods and accessories business grew significantly in global retail terms. Russia Over the past two years, ECCO’s business with Russia experienced a drop of 50% in the volume sold. However, ECCO’s strong brand position in Russia ensured that we continued to outperform our competition. Outlook The global economy continues to be volatile, and the market environment in which ECCO operates is undergoing significant change, not least because of the growing e-commerce industry. ECCO is addressing this with a clear strategy towards 2020. The Central European retail markets will continue to undergo changes in their distribution structures, which will, to some degree, have an adverse effect on ECCO. There is still considerable uncertainty in the Russian market, and it is too early to judge if retail sales are stabilising, or will continue to deteriorate. However, we are convinced ECCO will continue to outperform the market because of our strong brand position. The increased investments in owned retail, and the support of our business partners, are expected to generate continued sales growth in 2016. Investing in the future to continuously improve ECCO’s distribution, brand presentation, and organisation will cause short-term pressure on increasing profits. Nevertheless, the results for 2016 are expected to be on par with 2015, unless the recent market uncertainty adversely affects consumer spending. ECCO Annual Report 2015 3
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