Arcandor has revealed full-year net losses of 745.7 million (£663.7 million), as restructuring and tough trading at its department store chain Karstadt continued to pull down the German group’s earnings.
Although some of the losses incurred were through Arcandor’s travel and tourism arm Thomas Cook, Karstadt recorded soaring costs throughout the year to September 20, to report an adjusted loss of 4 million (£3.56 million), down from a pro forma profit of 148 million (£131.7 million) the year before. This, Arcandor admitted, was in part due to its “failed discounting policy”.
Turnover at the 90 department store chain nosedived 3.4 per cent to 4.1 billion (£3.6 billion) during the period.
Arcandor chairman Thomas Middelhoff said: “We are not satisfied with the trend in department stores. Therefore we have taken countermeasures with efficiency and cost-cutting programmes resulting in an earnings effect (EBITDA) of about 150 million (£133.5 million) for the current financial year.”
In March Karl-Gerhard Eick will take the helm as chief executive of Arcandor. MHE Retail chairman Edward Whitefield said he faces a tough job.
“His top priority will be to restructure the debt in the business to stop it bleeding to death,” said Whitefield. “The efficiencies made should start to have a positive effect but things will get a lot worse before they get better.”
He added that Karstadt will need to look carefully at its future discounting policy. “Germany has a lot of value retailers, not least C&A,” he said. “Department stores are very limited if they give discounts as their costs are so high.”
Arcandor, however, revealed that its home shopping division Primondo benefited from the trend towards online shopping as well as improved cost structures and robust overseas sales, notching up an 85 million (£75.6 million) increase in adjusted EBITDA to 90 million (£80.1 million).
Arcandor predicted EBITDA across the group will be over 1.1 billion (£979 million) in its current financial year. “A prerequisite for achieving our forecast is that the extent of the financial crisis does not increase significantly,” said Middelhoff.
Turnover at the 90 department store chain nosedived 3.4 per cent to 4.1 billion (£3.6 billion) during the period.
Arcandor chairman Thomas Middelhoff said: “We are not satisfied with the trend in department stores. Therefore we have taken countermeasures with efficiency and cost-cutting programmes resulting in an earnings effect (EBITDA) of about 150 million (£133.5 million) for the current financial year.”
In March Karl-Gerhard Eick will take the helm as chief executive of Arcandor. MHE Retail chairman Edward Whitefield said he faces a tough job.
“His top priority will be to restructure the debt in the business to stop it bleeding to death,” said Whitefield. “The efficiencies made should start to have a positive effect but things will get a lot worse before they get better.”
He added that Karstadt will need to look carefully at its future discounting policy. “Germany has a lot of value retailers, not least C&A,” he said. “Department stores are very limited if they give discounts as their costs are so high.”
Arcandor, however, revealed that its home shopping division Primondo benefited from the trend towards online shopping as well as improved cost structures and robust overseas sales, notching up an 85 million (£75.6 million) increase in adjusted EBITDA to 90 million (£80.1 million).
Arcandor predicted EBITDA across the group will be over 1.1 billion (£979 million) in its current financial year. “A prerequisite for achieving our forecast is that the extent of the financial crisis does not increase significantly,” said Middelhoff.
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