The management of the Belgian-based shoe retail chain says it is on target with its financial goals in spite of a 40.5 percent drop in net profit to €0.5 million for the first six months of this year. Operating income from continuing operations (EBIT) declined by 18.2 percent to €1.8 million, but the management is confident to hit the upper threshold of a previously forecast range of €5-7 million for the full year.
As previously reported, Brantano’s sales grew by 8.5 percent to €152.2 million in the latest 6-month period, with increases on a same-store basis of 3.9 percent in Belgium and 10.9 percent in the UK. They are now expected to reach the top end of an earlier forecast of €300-310 million for the full year.
Brantano has decided to increase its 2007 investment budget from €9 million to €10.2 million to accelerate the roll-out of a new store concept in Belgium, with the aim to renovate the entire network in the country by the first quarter of 2008. It will continue to support the reposition of the banner as a national retailer in the UK with increased marketing actions. Three new store openings are planning in the UK during the second half of this year.
The group’s gross margin improved to 51.1 percent in the first half of this year from 50.7 percent in the same period a year ago, thanks to a continued focus on the optimization of the purchasing process and on stock management, intended to achieve more qualitative turnover.
However, operating results before adjustments showed a decline of 53.7 percent to €1.8 million due to extraordinary net gains obtained last year from the sale of real estate and other factors. The drop was also partly due to higher marketing expenses in the UK and to an increase in rental costs in Belgium after the sale of the property.
After adjustments, operating profit before amortization and depreciation (EBITDA) declined by 6.7 percent to €6.5 million, or 4.3 percent of sales.