STEEN BORGHOLM Chief Executive Officer CEO’S REPORT At ECCO we remained firmly committed to our longterm business development strategy in 2017, without losing sight of short-term financial performance. As a result, the company stands stronger at the end of 2017. Delivering our best financial result to date has only been possible through the dedicated efforts of our staff, at every level, across the company. The speed of change in the fashion footwear industry is accelerating, and the retail industry is undergoing significant change driven mostly by the transformation in consumer behaviour. The new reality for brick and mortar retail is worsening footfall coupled with intensifying competition from e-commerce. During 2017, retail price pressure was evident as the sales period totalled 5-6 months and special promotional occasions such as Black Friday gained further traction. This caused margin erosion for the industry at large. The US retail industry for example, is challenged by many store closures, even above the level seen during the financial crisis in 2008 and 2009. At ECCO we are continuously assessing what the changing industry will mean to our business, both in terms of challenges and opportunities, and we are launching responsive initiatives. Being a global brand with a large store portfolio and an increasingly effective online presence, we are well positioned to benefit from the channel shift, as consumers search and shop across channels. In 2017, ECCO again experienced strong Direct-to-Consumer sales growth, globally. New product launches in the increasingly popular premium sneakers category have supported this positive development. Staying true to our heritage of constant innovation in design, comfort, and materials is being well received by consumers. Innovation and digital advances are on the agenda everywhere, and in 2017 we accelerated digital efforts in design, prototyping, and sales processes, creating more agility, efficiency, and speed. Innovation is happening across the company; it is part of our culture. Initiatives in our production have delivered valuable advantages of scale and reduced the environmental impacts of our production. Together with our more than 21,000 employees, I remain confident we will continue to drive the company forward in 2018. Knowing that to stay successful in a rapidly changing environment, speed and determination in the execution of longer-term business strategies are more important than ever. Steen Borgholm Chief Executive Officer ECCO Annual Report 2017 3
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