Macintosh Retail Group says that Brantano, the Belgian and British shoe chain acquired by the Dutch company last year, suffered a sales decline of about 12 percent to €274.3 million in 2008. A drop of €22 million was attributed to exchange rates, which affected the sales reported for Brantano’s U.K. stores, indicating a drop in constant currencies of just under 5.7 percent.
One of the major changes was that Brantano’s management was decentralized, with separate managers in Belgium and the U.K., while the international structure based in Belgium was dismantled. Stephane van Weyenbergh, who was Brantano’s country manager for Belgium, has been appointed general manager for all the operations of the Macintosh group in the country. Furthermore, David Short, former managing director of Deichmann UK, is now in charge of Brantano in the same country. He took over last June from Diererick van de Kerckhove, who became general manager of Scapino, the Dutch discount shoe retailer previously acquired by Macintosh Retail Group. Brantano’s former chief executive, Kurt Moons, left shortly after its subsequent acquisition.
Brantano’s operating profit was hit by one-time costs of €5.2 million for integration measures, a provision for loss-making stores in the U.K. and an impairment of assets in the country. Due to much-improved performance in the second half, Brantano had a slightly positive operating result last year. But adding financing costs for the acquisition, Brantano contributed a net loss of €6.3 million for the year. The reported figures cover the full year, although the acquisition became effective on Jan. 23.
Excluding Brantano, Macintosh Retail Group managed to roughly uphold the sales of its fashion division on a comparable basis last year. This business comprises Pro Sport sneaker stores in the Netherlands, along with Brantano and Scapino, the Dutch shoe discount chain purchased earlier on, and various shoe stores operating in the Netherlands under the Dolcis, Invito and Manfield banners. Macintosh declined to provide details on each of the chains separately.
Thanks to acquisition, the fashion division lifted its sales to €612.8 million, up from €339.2 million in 2007, but excluding Brantano, they declined by less than 1 percent. Adding other units in the furniture and telecoms business, the Macintosh Group’s sales tallied €1,186.5 million, up by nearly 29 percent due to Brantano, and down by 0.8 percent without the newly acquired shoe chain.
After a rough first half, Macintosh Retail Group took many measures to improve its product mix and inventory management. It thus managed to lift its gross margin by 2.4 percentage points to 45.3 percent for the year. The fashion division increased its operating profit in the second half.
However, due to one-time expenses of €12.7 million for Brantano as well as loss-making stores in other divisions, the Macintosh group’s operating profit dipped to €54.1 million, down from €66.9 million in 2007. Excluding these expenses, operating profits would have been roughly flat for the group in the second half. The company ended the year with a much-reduced net profit of €31.3 million, compared with €47.5 million in 2007.
The company stressed that it would continue to invest very conservatively this year, with just a few new store openings in its fashion division. It declined to provide detailed guidance for this year, but pointed out that Scapino would seek opportunities to expand its discount formula in the tough market circumstances prevailing in the Netherlands, perhaps by launching smaller stores.
The measures implemented at Brantano in 2008 are expected to yield cost savings of about €3 million on an annual basis. Macintosh Retail Group’s managers expect that, including financing costs, Brantano should make a positive contribution to its net profits this year.