Danish footwear brand Ecco said it has remained financially strong despite the challenges of the year 2020. The company reported sales of €1.09 billion in 2020, down 19.7 percent from €1.36 billion a year ago, and the operating margin narrowed to 4.6 percent from 14.8 percent.
Profit before taxes reached €44.7 million, down from €195.8 million in 2019, and net profit dropped to €23.1 million from €147.6 million.
Ecco’s comparable store sales fell by 42 percent, whole revenues declined by 29 percent and online sales rose by 34 percent. By product, shoe sales dropped by 19 percent, accessories were down by 22 percent and leather by 24 percent.
By region, overall sales contracted by 38 percent in North America, by 31 percent in Asia-Pacific, by 13 percent in Greater China and by 9 percent in Europe. Europe was severely hit by the Covid-19 pandemic, but outperformed thanks to the acquisition in February 2020 of the company’s Russian distributor Ecco Ros.
Thanks to the acquisition of the Russian business and the performance of e-commerce, Ecco’s direct-to-consumer sales grew by 2 percent.
The company ended 2020 with a network of 2,180 monobrand stores, down by a net 49 units.
Ecco said that its top priority last year was to ensure the safety of its more than 21,000 employees worldwide, as well as consumers. The Covid-19 outbreak prompted the company to take early action to restrict travel, office and factory visits and close stores.
Despite the exceptional circumstances in 2020, Ecco continued to invest heavily in its distribution. On top of the acquisition in Russia, it bought a large number of Ecco brand stores in the Middle East and the Netherlands. Large investments were made in digital platforms, advanced marketing capabilities and infrastructure that enables product innovation.
Last year, the company launched its first fully digital wholesale showroom in Nieuwegein, in the Netherlands. Twenty-four key wholesale accounts use the facility, which will be expanded. In China, the company launched a new customer relation management program to reach clients via mobile phones and allowing them to use their handsets to make purchases.
Investments in 2020 reached a record high of €195.2 million, of which €126 million spent on investments, and the free cash flow slipped slightly to €163.7 million from €169.2 million in 2019.
Ecco’s cash position at the end of 2020 was €238.9 million against €251.8 million a year earlier.
The company anticipates a gradual recovery in 2021 and to finish the year with an increase in sales and profitability over 2020. Since Jan. 1, the group’s European business has been combined into one legal entity, Ecco Europe AG. Over the past 10 years, the European business was operated under two separate units, one located in Amsterdam, managing the wholesale activity, and one in Zug, Switzerland, in charge of retail and e-commerce.
Continuing Ecco’s longstanding efforts to create an increasingly sustainable footprint, efforts were taken a step further with a set of ambitious environmental targets. By 2030, the company plans to be operating with renewable energy and using only bio-based chemicals and closed water loops in its tanneries.