The Brantano Group successfully concluded a syndicated 5-year loan of €80 million on Christmas Eve, rescheduling the outstanding loans with its existing bankers, some of which were prepared to increase their credit position toward the Belgian-based shoe retailing company. The day before, Brantano sold its distribution center in the UK to the Standard Life investment fund for £8,785,000, or €12.5 million, leasing it back for 20 years at normal market conditions.
These actions will help reduce finance charges, improving Brantano’s balance sheet after the numerous investments of the past few years. Last year the group worked hard to reduce its debt by generating more free cash flow from its own operations. Brantano’s stated aim is to achieve a leading position in the distribution of medium-priced footwear for the whole family in Europe under its own banner. At the end of September, it had 313 stores in 9 countries.
Brantano has reported a 12.6 percent increase in pre-tax earnings for the first 9 months of 2003. They grew to €8.4 million or 3.6 percent of consolidated sales, up from 3.3 percent in the year-ago period. On the other hand, a higher tax rate led the Belgian-based shoe retailer to post a net profit of only €5.8 million for the period, down from €6.9 million.
As previously announced, Brantano’s turnover rose by 0.9 percent to €229.8 million in the 9-month period, with the United Kingdom overtaking the score in Belgium for the first time, but the growth in local currencies was more like 5.8 percent. New investments worth €9.7 million were carried out in those months. Before accounting for amortizations, the operating cash flow (Ebitda) dropped from 18.4 to 16.1 percent of sales, but thanks to strict cost controls the operating margin (Ebit) increased from 8.7 to 10.2 percent.
The hot summer had a strong negative impact on the turnover of the 3rd quarter, which declined to €79.8 million from the year-earlier level of €82.3 million in spite of new store openings. Sales increased on a same-store basis in the Netherlands, following a major reorganization, and the gross margin remained high overall. However, the Ebitda margin declined from 6.7 to 5.7 percent year-on-year in the quarter, and the Ebit margin was down from 3.6 to 3.4 percent. The pre-tax margin improved from 3.0 to 3.1 percent, but the net profit declined to €2.4 million from €3.8 million.