The big Danish shoe company's pre-tax profit increased by 43 percent last year to 904 million Danish kroner (€121.6m-$160.9m) as its sales rose by 16 percent to DKK 7.1 billion (€954.8m-$1,264m), of which the vast majority - DKK 6,754,712 (€908,400-$1.2m) - were made up of shoes and accessories. The operating margin improved to 13.4 percent from 10.7 percent in 2010, probably due in part to the lifting of the European anti-dumping duties on Chinese leather shoes one year ago.
| Ecco Consolidated Income Statement | |||
| (DKK'000, Year ended Dec. 31) | |||
| 2011 | 2010 | % | |
| EMEA (s+a)* | 4,178,048 | 3,631,894 | 15.0 |
| Americas (s+a)* | 1,210,084 | 1,139,397 | 6.2 |
| Asia/Pacific (s+a)* | 1,366,580 | 1,009,353 | 35.4 |
| Others | 334,114 | 330,504 | 1.1 |
| TOTAL NET REVENUE | 7,088,826 | 6,111,148 | 16.0 |
| Cost of Raw Materials | 2,937,517 | 2,529,332 | 16.1 |
| Other External Costs | 1,446,555 | 1,262,485 | 14.6 |
| Amortization and Depreciation | 329,871 | 341,973 | -3.5 |
| Staff Costs | 1,566,663 | 1,342,084 | 16.7 |
| Ebit | 946,735 | 652,747 | 45.0 |
| Net Financial Expense | 42,944 | 21,711 | 97.8 |
| Pre-tax | 903,791 | 631,036 | 43.2 |
| Tax | 250,601 | 155,423 | 61.2 |
| Minority Interests | 98,555 | 65,635 | 50.2 |
| NET | 554,635 | 409,978 | 35.3 |
| (s+a)* shoes & accessories | |||
ECCO pointed out that its results could have been even better if its large tannery and shoe factory in Thailand had not suffered catastrophic flooding last October. The company admitted that the floods will affect its performance in 2012, but despite this, the management is expecting further growth this year on the basis of confirmed spring orders and early indications for the autumn.
ECCO reacted quickly to the floods by transferring production to a temporary site 100 kilometers away, to its other factories around the world and to external partners. Meanwhile, its Thai tannery resumed production last Feb. 1 and its local shoe manufacturing facility should be back in full production on renovated premises by the end of 2012.
The 16 percent sales increase achieved in 2011 was attributed by ECCO to higher average selling prices for shoes as well as to an increase in the number of pairs sold, as its collections were extremely well received. The company pointed in particular to its golf shoes, whose sales rose by 42 percent, its men's shoes and the comfortable new ECCO Sculptured range of women's shoes – the first range of direct-injected high-heeled shoes on the market. Sales of accessories and shoe care products rose by 44 percent and made up 3 percent of the total turnover.
The biggest growth was achieved in the Asia-Pacific region, where sales rose by 35 percent to 20 percent of total revenues. The growth was driven by China, where the company invested the most last year in its own stores, partner stores and shop-in-shops. Sales in North America rose by 6 percent, aided by the success of its golf shoes.
Europe, the Middle East and Africa remained the biggest region, accounting for 62 percent of the turnover, and sales there went up by 15 percent. The uncertain economic situation resulted in limited growth in the more mature markets, but Germany showed a good performance. The group again experienced further improvement in its strong East European business.
The number of ECCO concept stores, outlets, shop-in-shops and “shop-points” around the world grew to 3,792, located in 94 countries, at the end of last year. They included 1,002 ECCO shops, up from 945 at the end of 2010. The company entered four new markets in 2011: Kazakhstan, Kyrgyzstan, Pakistan and Lebanon.
The total number of employees within the group rose last year by 2,222 to 19,759. In 2011, the company launched the ECCO University, described as a global learning platform established to develop employees at all levels. It also introduced a “global talent management concept,” using formal structures and processes to identify and guide high-performing employees with high potential.
ECCO says it has over 200,000 followers on its Facebook page, started in 2009.
ECCO's annual report does not provide many other significant details on the company's operations, but it describes at great length the upheaval endured last autumn at its Ayuttaya factory in Thailand because of the floods. The disaster paralyzed more than one-third of the company's own production capacity and left many of its 3,500 employees homeless. None of them was injured.
Professional diving teams were hired to recover molds and other critical tools under three meters of murky water to help transfer the production to other sites. Teams of employees sailed back and forth from the local product distribution center on the few available boats to move out more than 400,000 pairs of finished shoes awaiting shipment, but only about 330,000 pairs could be delivered to markets.
ECCO set up a €1 million fund to help the factory's employees, adding to donations of DKK 730,000 (€98,175-$130,000) from other staff members around the world. Many local employees of ECCO helped their colleagues and their children recover from the disaster. The also helped the local police reopen 10 schools and restore 20 temples.