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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
WOLFGANG SCHULTE, HEAD OF IR, DOUGLAS HOLDINGS AG: Morning, ladies and gentlemen, welcome to our conference call and thank you for being with us this morning. Today, Douglas Holdings Management is represented by Dr. Henning Kreke, our CEO. My name is Wolfgang Schulte. I am Head of Investor Relations.
First of all we will hear a statement from Dr. Kreke. The corresponding slides to the statement were sent to you by email this morning. After the statement you will have the opportunity to ask questions. I would now like to hand over to Dr. Kreke.
HENNING KREKE, CHAIRMAN AND CEO, DOUGLAS HOLDINGS AG: Good morning, ladies and gentlemen, and thank you for joining us in the second quarter of our current fiscal year. The Douglas Group continued its solid sales and earnings performance. For the first six months Group sales were up by 6.1% to just over EUR1.7 billion. Adjusted for the changes in our portfolio, that is adjusted for the divestitures of Rene Kern and Pohland in 2007, our growth rate came in at 9.9%. Like-for-like, we were able to increase sales by 2.7%. However please keep in mind that Q2 figures were positively impacted by the early Easter business, as this year's Easter celebration fell fully in to the month of March.
Overall sales in Germany climbed by a solid 1.9% to EUR1.1 billion. Like-for-like sales in our home market were up by 1%. Preliminary reports from the Federation of German Retailers indicate that the Douglas Group continued to outperform the German retail industry as a whole in the first half of our business year. Our foreign subsidiaries again proved to be the Group's main growth engine, boosting Group sales by 15.2% to EUR602 million. Like-for-like sales abroad increased by a noteworthy 6%.
The share of our international revenues to total revenues rose to 34.5% following about 32% a year earlier. Positive performance outside of Germany once again underscores the growing importance of our international expansion activities. Looking at the second quarter alone, the Douglas Group increased its net sales by 6.9% to EUR670 million, adjusted for the divestitures of Rene Kern and Pohland, the growth rate came in at 10.9%, Like-for-like we saw a sales increase of 4.4%.
In Germany, total revenues between January and March rose by 2.7% while like-for-like sales increased by 4.1%, benefiting from the earlier Easter business. Another interesting indicator is our sales footage, which over the last 12 months rose by 3.9% to more than 543,000 square meters. Earnings before taxes in the first half of our current fiscal year totaled EUR136.5 million following EUR131.1 million in the same period last year. Especially our Douglas perfumeries abroad, as well as our books and confectionery divisions, contributed to this increase of more than 4%.
Looking at the second quarter alone, EBT increased by almost EUR5 million to minus EUR3.7 million, benefiting from the already mentioned earlier Easter business.
Let me now turn to the key items on the consolidated statement of income. From October to March, the Group's gross profit rose by more than EUR43 million to EUR880 million. Our gross margin came in at 46.8% after 47% in the previous year. This slight decline in the gross margin can be fully attributed to advanced price increases in anticipation of the rise in the German VAT in Q1 and Q2 of fiscal 2006/2007.
Other operating income rose to EUR98 million after EUR86 million a year earlier, mainly as a result of higher reimbursement of promotional expenses. This increase is offset by corresponding higher promotional expenses shown under other operating expenses. Personnel expenses remains flat at 19.4% of net sales. In absolute terms personnel expenses rose by EUR18 million to EUR339 million. The numbers employed in the Group grew by 1,200 to approximately 23,500.
Other operating expenses increased by EUR32.5 million to EUR379 million. This increase of 9.4% exceeded sales growth primarily because of high rental costs as a result of the higher number of new store openings in the first six months of the current fiscal year. EBITDA increased by EUR5 million to approximately EUR198 million. The EBITDA margin came in at 11.3% after 11.7% over the corresponding period during the last year.
Net financial expenses decreased to EUR8 million due to income of EUR3.5 million as a result of the sale of interest rate swaps which were no longer needed. Past expenditures of around EUR48 million were roughly EUR3 million higher than last year, thereby increasing our tax ratio by 80 basis points to 35%. As a reminder, tax expenditures in the last fiscal year were positively impacted by a one-off tax credit of EUR7.4 million from the capitalization of an income tax receivable. Adjusted for this one-off tax credit, the German tax reform, which became effective as of January 1, had a beneficial impact on our tax ratio.
Based on a reported net income of EUR88 million, earnings per share increased to EUR2.26 from EUR2.19, 12 months earlier. This increase was largely due to a slightly improved operating profit.
Moving on to slide four of the presentation, we increased our capital expenditure by almost EUR7 million to about EUR66 million, both into the expansion as well as the upkeep of our store network. A total of 69 new stores opened their doors during the first six months, including 51 perfumeries, nine book shops, three jewelry stores and six confectionery shops.
At the same time we closed down 36 stores, of which 17 relate to the planned streamlining of our store network in the Confectionery division. The investment focus was placed on the Perfumeries division in Spain, Italy, Turkey and Poland where a total of 26 new stores were opened. As of March 31 the Group's store network comprised 1,875 stores compared to 1,735 stores in the previous year.
Moving on to the performance of the individual divisions, our Douglas perfumeries managed to further extend their market leading position in Europe. Our 1,101 perfumeries increased their sales by 9% to EUR1 billion. Like-for-like, sales were up by 3.2%. Especially our foreign subsidiaries continued to grow rapidly; they recorded a sales growth of 15.3% to a total of EUR501 million. This notable increase was the result of 44 new perfumery openings during the first half year as well as the acquisition in the Baltic States, closed in August of last year.
Furthermore, a remarkable like-for-like performance of 6.1% significantly contributed to this development, especially our subsidiaries in Poland, the Netherlands, Italy and Russia continued their dynamic sales growth during the first half of fiscal 2007-2008. All-in-all our perfumeries division now generates 49.8% of its turnover outside of Germany compared to 47.1% a year earlier. The 442 perfumeries in Germany recorded sales of around EUR504 million, this represents an increase of 3.4%. Like-for-like sales were up by 0.6% over the previous year's figures, where sales received a boost from advanced purchasing in the Christmas quarter in view of the much dreaded VAT increase. However please note, the good performance in...
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