The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
FRANKFURT, Germany — Gerry Weber International AG fell the most in more than 14 years in Frankfurt trading after the German fashion chain cast doubt on its ability to meet sales and profit goals because of a difficult business climate.
The stock plunged as much as 29 percent to 21.12 euros, the most since Bloomberg records began in 2000.
Financial targets for 2015 are “no longer ensured,” the company said after markets closed Tuesday, predicting a decline of 20 percent to 25 percent in earnings before interest and tax. Analysts had been anticipating an increase.
A shrinking German clothing market, as well as tough conditions in Russia and eastern Europe, are contributing to difficulties at Gerry Weber, which is based in Halle in the state of North Rhine-Westphalia. The company cited a preference among German consumers to buy higher-priced products such as cars or furniture, or to invest their money in real estate.
First-half earnings fell by 15 percent to 52.5 million euros ($59.5 million) on a basis that excludes interest, tax, depreciation and amortization, Gerry Weber said. Profit was affected by above-average markdowns on seasonal products, and increased costs of expansion, according to the company.
The retailer said it won’t deviate from its plan to expand internationally, while speeding up the time it takes to get seasonal products into stores, and seeking cost savings. It derives about 40 percent of its revenue from outside Germany.
Hallhuber, the Munich-based fashion company acquired in December, was a bright spot in the first half, boosting like- for-like sales by 1 percent, the company said.
Gerry Weber shares were down 23 percent at 21.22 euros as of 10:26 a.m. in Frankfurt, extending their decline this year to 38 percent and cutting the retailer’s market value to 980 million euros.
By Paul Jarvis; editor: Matthew Boyle, Thomas Mulier.
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