German fashion and lifestyle firm Gerry Weber International AG (GRYIF.PK) Friday reported a lower second-quarter profit, reflecting slower pace of sales growth, mainly due to bad weather conditions in Germany and across Europe.
While the first quarter was impacted by very mild winter which made it difficult to sell winter merchandise, the months of February and March were affected by unusually low temperatures, the company said.
In view of the weather-induced weakening during the first half, as well as the risk of continued poor weather conditions affecting the trading environment in Europe, the company cut its earnings and sales outlook for the fiscal 2012/13, but said it stands by its medium and long-term growth plans.
Gerry Weber noted that the adverse and cold weather conditions, almost all across Europe, weighed on customer footfall in city centres and stores, which resulted in like-for-like sales decline.
Lower customer frequency had a direct impact on the firm's retail business, and sales growth slowed down to 17.4 percent in the second quarter, following a 36.1 percent rise in the first quarter of 2012/13.
For the second quarter, the company posted net income of 17.8 million euros or 0.39 euros per share, lower than 20.2 million euros or 0.44 euros per share in the previous year.
Earnings before interest and tax or EBIT declined to 25.6 million euros from 29.3 million euros a year earlier. EBIT margin was 11.7 percent, compared to 13.9 percent in fiscal 2012.
Sales revenues for the quarter increased 3.8 percent to 219 million euros, mainly driven by expansion of the company's own retail spaces in Germany and abroad.
In the first half, net income declined to 29.3 million euros or 0.64 euros per share from 31.6 million euros or 0.69 euros per share in the same period last year. Half-yearly sales grew 7.4 percent year-over-year to 403.9 million euros. Like-for-like sales decreased 4.1 percent.
Looking ahead, the company has revised down its short term targets, and now expects full-year sales to be between 860 million euros and 870 million euros, compared with its earlier outlook of 890 million euros and 900 million euros.
EBIT is currently anticipated to be around 120 million euros for fiscal 2012/13, while the company had forecast 131 million euros to 135 million euros previously.
On Frankfurt's Xetra, Gerry Weber shares are currently trading at 32.21 euros, up 1.09 euros or 3.51 percent.
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