German fashion and lifestyle firm Gerry Weber International AG (GRYIF.PK) reported Friday a flat profit for its first quarter mainly reflecting lower like-for-like sales and margin pressure. Revenues, however, increased in double-digit rate benefited from the expansion of the Retail segment and new store openings. Further, the company backed its fiscal 2013 earnings and sales forecast.
In its first quarter, net income remained flat with last year's 11.5 million euros or 0.25 euros per share.
Earnings before interest and taxes or EBIT edged up 0.8 percent to 17.8 million euros from last year's 17.7 million euros. The company was adversely affected by the effects of the above-average expansion of the Retail segment and the weak market environment.
EBIT margin, meanwhile, declined to 9.6 percent from 10.7 percent in the prior year quarter, as the start of winter sales in January 2013 had a stronger impact on the operating margin than in the previous years due to the increased revenue contribution made by the Retail segment, the company noted.
Sales revenues in the first quarter grew 12 percent to 184.9 million euros from 165.1 million euros a year ago, primarily attributable to the expansion of the Retail segment and the new Houses of GERRY WEBER and mono-label stores opened. Retail revenues climbed 36.1 percent to 85.6 million euros.
Meanwhile, like-for-like sales were down 3.4 percent on the previous year, against the background of the weak market environment, which was characterised by reduced consumer spending, and the weather-related decline in customer frequency.
The company noted that an independent German trade magazine for the fashion business determined a negative sales trend for November and December 2012 as well as January 2013 between a decline of 5 percent and 9 percent compared to the respective prior year months.
Wholesale segment's sales revenues dropped 2.8 percent to 99.3 million euros, attributable to the weaker market environment as well as a change in segment reporting and the related adjustment of the prior year figures. Also, last year's revenues included the results generated by the acquired Dutch Franchise stores.
Looking ahead, Gerry Weber said it once again confirm the guidance for the current fiscal year 2013, barring an unforeseen deterioration in the economic environment in key output markets.
The company projects to grow profitably and continues to expect EBIT of 131 million euros to 135 million euros for the year and consolidated sales between 890 million euros and 900 million euros. The sales forecast represent a double-digit increase on the previous year.
Gerry Weber said in its statement, "Both the Retail segment and the Wholesale segment are clearly poised for growth in the coming months. The five GERRY WEBER brands hold an excellent position in its market segment. Therefore we see sufficient growth opportunities especially outside Germany."
On Frankfurt's Xetra, Gerry Weber shares closed Thursday's trading at 34.99 euros, up 0.18 euros or 0.52 percent.
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