CEO’S REPORT As I write my Annual Report, no one knows how the war in Ukraine will end. We have repeatedly condemned the unacceptable bombing of civilians in Ukraine and wish the war will end as soon as possible. ECCO’s heart is our people. Through many years, ECCO has experienced different crises. Our first concern has always been for the welfare of our employees. We have helped them through the crises and beyond, and we feel morally bound to also do the same now. If ECCO closed our business in the Russian market, we would send our 1,800 staff and their relatives, probably about 5,000 people in all, on the street. Also, thousands of other jobs would be lost across the world in our factories, shops, and offices, as ECCO is one of the very few in the industry who controls the majority of our value chain and produces leathers and shoes in our own tanneries and factories. Turning to 2021, it was a year with many challenges for ECCO. We sadly lost colleagues across the world to the COVID-19 pandemic. They will be missed. Our entire supply chain was shaken. Freight disturbances, factories running at lower efficiency due to COVID-19, and a lot of unpredictability on raw material supply. More than ever, we appreciated owning our own supply chain from tanneries to distribution. We managed to keep cancellations of orders to less than 1%. We have seen growth in all areas of our business. The shift in consumer behaviour towards digital channels is a new reality. ECCO’s investments in and focus on this distribution showed payback with 42% growth. Direct-to-consumer sales grew by 35%. A very encouraging development. ECCO’s sales in China continued to outperform with constant growth. The integration of the Russian business, acquired in 2019, went well thanks to an impressive performance by the new management and staff. Turkey and the Middle East showed very encouraging growth and a direct-to-consumer focus. Our performance in Europe and the US improved compared to 2020, but it is still unsatisfactory. ECCO’s new management is focusing on the transformation of the company - a transformation which is coming from inside the company. A total rethink of the way we do things. The focus is on simplicity, clarity, and streamlining of all areas of the business. Chief Executive Officer, Panos Mytaros. A modern value chain set-up from idea to the consumer. A stronger brand, a clear brand identity, and a more focused brand. A brand which talks more to its consumers and is closer to the consumer with a renewed look. A digital transformation in all areas of our business will enable us to work smarter and react to data, producing a cleaner and focused product range. Our commitments to innovation and quality remain of very high priority. In 2020, we formalised our environmental targets towards 2030. We are proud of achieving the first milestone for 2024, in 2022 already. Our responsible attitude towards the environment is intensified, and many new projects leading to better and cleaner products and ways of working are on their way. We are looking with confidence towards the future, and towards a modern and rethought ECCO. An ECCO transformed from its own core and by its own people. Our ECCO. Panos Mytaros Chief Executive Officer 5 Annual Report 2021
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