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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Ladies and gentlemen, welcome to the Douglas Holding telephone conference for the first six months of fiscal 2006/2007. [OPERATOR INSTRUCTIONS]. It is now my pleasure to hand you over to Mr. Wolfgang Schulte, Head of Investor Relations.
WOLFGANG SCHULTE, HIR, DOUGLAS HOLDING AG: Good morning, ladies and gentlemen. Welcome to our conference call and thank you for being with us. Today, Douglas Holding's management is represented by Dr. Burkhard Bamberger, our CFO. My name is Wolfgang Schulte; I'm head of Investor Relations.
First of all, we will hear a statement from Dr. Bamberger. 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. Bamberger.
DR. BURKHARD BAMBERGER, CFO, DOUGLAS HOLDING AG: Good morning, ladies and gentlemen. Thank you for joining us. The Douglas Group continued its good sales and earnings performance in the first half of our current fiscal year. For the first six months Group sales were up by 12.6% to just over EUR1.6b.
Please note, however, that our sales have been boosted by acquisitions in the Book and Candy divisions. Adjusted for these acquisitions, the organic growth rate was 8.6%. Like for like, we were able to increase sales by 4.1%. However, it should be noted that this year's Easter business started in March already and, therefore, had a positive impact on our Q2 sales.
Overall, sales in Germany climbed by a substantial 13.4% to EUR1.1b. Like-for-like sales in our home market were up by 3.5%. Preliminary reports from the Federation of German Retailers indicate that the Douglas Group continued to outperform the German retail industry. Our foreign subsidiaries posted an equally strong sales growth of 11%. Like-for-like foreign sales increased by a solid 5.4%.
As a result of acquisitions and the good sales performance in Germany, the share of foreign Group sales decreased slightly to 31.7%. In the second quarter of our current fiscal year the Douglas Group increased its net sales by 12.3% to EUR627m. Like for like, this translates into an increase of 3.9%. In Germany sales between January and March were 13.4% higher and like-for-like sales increased by 3% compared to the previous year.
Also, sales footage grew substantially. As per end of March selling space in the last 12 months rose by 20% to 523,000 square meters. Earnings before taxes in the first half of our current fiscal year totaled EUR131.1m, following EUR110.5m in the same period last year. All our divisions contributed to this notable increase of nearly 19%, which was driven by the strong performance of our Perfumery & Jewelry Division. Thanks to higher gross margin, the EBT margin increased from 7.6% to 8%.
Let's now have a closer look at the consolidated statement of income. In the first half year the Group gross profit rose by more than EUR98m to almost EUR775m. Boosted by the solid growth of all of our divisions in the Christmas quarter, our gross margin came in at 47% after 46.2% in the previous year. Other operating income rose to almost EUR86m after EUR76m a year earlier, mainly as a result of higher reimbursements of promotional expenses we incurred in our Perfumeries division. Higher promotional costs are, therefore, shown under other operating expenses.
Personnel expenses remained unchanged at 19.5% of net sales. In absolute terms, personnel expenses rose by EUR36m to EUR321m. The number of employees in the Group grew by 2,400 to approximately 22,300. Other operating expenses increased by EUR45m to EUR347m. This increase of around 15% exceeded sales growth primarily because of higher promotional and rental costs in the Christmas quarter. EBITDA increased by EUR27m to approximately EUR193m, mainly driven by sales growth and a higher gross margin. The EBITDA margin in the first half year reached 11.7% compared to 11.3% in the same period last year.
Net financial expenses in the first half year have increased to EUR10m due to a higher net debt position. Tax expenditures of around EUR45m were EUR1m lower than last year, however, tax expenditures in Q1 were positively impacted by a one-off tax credit of EUR7.4m from the capitalization of an income tax receivable. As a result, our tax ratio declined by some 7 percentage points to 34%. Based on our reported net income of EUR86m, earnings per share increased to EUR2.19, up from EUR1.62 12 months earlier. This notable increase was mainly the result of higher pre-tax earnings coupled with the lower tax rate and lower minority interest.
Moving on to slide four of the presentation, we invested about EUR59m during the first half of this fiscal year in both the expansion of our store network and the upkeep of our existing locations. In total, capital expenditure was slightly below last year's level but is planned to pick up in the second half of this fiscal year. In total, 56 new stores opened their doors during the first six months including 29 perfumeries, 12 book shops, 4 jewelry stores, one fashion store and 10 confectionery shops.
We closed down 35 stores, of which 12 relate to the planned streamlining of Susi Susswaren, our recently acquired confectionery chain. Outside of Germany the main investment focus were the Perfumeries in Italy and Spain, where a total of 12 new stores were opened. As of March 31 the Group's store network comprised 1,735 stores compared to 1,503 in the previous year.
Let's now have a look at the divisions. The Douglas Perfumeries managed to further extend their market leading position in Europe during the first six months of this fiscal year. Our 956 Perfumeries posted sales of EUR923m. This constituted an increase of 9.1%. Like-for-like sales were up by 5.1%.
Although our foreign subsidiaries contributed to this growth, they recorded an 11% sales growth for a total of EUR434.5m. This notable increase was a result of the large number of new Perfumeries opened during the last 12 months, as well as the good like-for-like performance, which came in at 5.6%. Especially our subsidiaries in The Netherlands, Italy and in the Eastern European countries, particularly Poland and Russia, maintained their dynamic sales growth during the first half of fiscal 2006/2007.
The Perfumeries division now generates 47.1% of its turnover outside of Germany compared to 46.3% a year earlier. The 429 Perfumeries in Germany recorded sales of EUR488m. This represents an increase of 7.6%. With like-for-like sales 4.6% higher than a year earlier, the German Perfumeries almost kept pace with the growth of our foreign perfumeries. However, please...
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