CEO’S REPORT Steen Borgholm, ECCO’s Chief Executive Officer 2020 was a test of ECCO as an organisation and business. Owning the entire value chain, from rawhide to retail, multiplies the financial effects of the collapse in sales caused by COVID-19. In ECCO, we pride ourselves of having a culture that stands the strongest when the wind blows straight in our face. This was proven right in 2020, when our dedicated staff focused on getting ECCO through the crisis in the best possible way. ECCO remained profitable in 2020, albeit much reduced compared to previous years. Across our business, rapid decisions were made to adapt to the new situation and execution was accelerated. In sales and marketing, this meant shifting to full digital sales focus. A complete collection and supply chain reshuffle was conducted in weeks, and many decisions were made in the face of high uncertainty. Radical reductions in our factory output ensured inventories were kept from skyrocketing. The financial impact was further reduced by lowering operational costs by more than 20% from pre-COVID-19 plans. ECCO also in 2020 launched new successful products. The Athleisure business as well as the Golf business saw strong consumer sales because products such as the ECCO S-Three golf collection and ECCO Zipflex athleisure collection were launched as consumers looked for products for safe outdoor activities. On the other hand, the formal dress categories proved very difficult as people worked from home and social gatherings were cancelled. Key strategic initiatives continued. A successful take-over of the Russian business from our long-standing partners, digital platforms, and a new factory in Vietnam drove investments to a record high. Further investments were made in innovation capability as a brand new Research & Development Centre opened at ECCO’s Headquarters in Denmark. ECCO also in 2020 took a major new step forward in its efforts to reduce our environmental impact, setting very ambitious targets for this decade. With vaccines being rolled out globally, there is hope we can start looking forward. Many things will change after this crisis. Consumer behaviour will change, but also what matters to consumers will change. People have grown more accustomed to the digital world. They have gone more casual, but there are also signs that over-consumption of cheap products for environmental reasons will be replaced by purchases of fewer products, but better quality, long-lasting, and sustainable. In ECCO, we have been moving people since 1963, and I am confident ECCO will be more relevant than ever before in the years to come. Steen Borgholm Chief Executive Officer 5 Annual Report 2020
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