Lingerie manufacturer Van de Velde has had to deal with a 92 % profit drop, down to 2.5 million euro, as the Belgian company has written off its entire stake in its American subsidiary Intimacy.
"Turnaround hasn't started" at Intimacy
Van de Velde's American subsidiary Intimacy has been struggling for years, with another turnover drop in 2014, down 16 % (a decrease of 12 % on a like-for-like basis) in local currency.
"Intimacy's profitability continues to suffer from turnover drops and its turnaround has not started in 2014", the press release stated. It also mentions a "significant loss on a stand-alone basis (from its Intimacy shops)". The company admits that "it has not reached its goals and that Intimacy's performance was well below the targets it had set when it acquired the subsidiary in 2010."
The company has now valued Intimacy's brand name and good will at zero, which means it has written off 31.4 million euro - severely impacting its net profit.
Group turnover up 8.7 %
Van de Velde has performed quite well in 2014: turnover grew 8.7 % (to 198.4 million euro, up 7.2 % on a like-for-like basis), while its wholesale activities grew 9.6 % thanks to its successful PrimaDonna Swim launch.
Intimacy aside, its retail activities also performed well: turnover in continental Europe grew 20.3 % and its British subsidiary Rigby & Peller grew 6.8 % (+ 1.6 % on a like-for-like basis) in local currency. The group's EBITDA grew 18.6 % to 57.7 million euro.
Excellent 2015 forecast
The lingerie group expects growth in its wholesale division for the first half of 2015, as its pre-orders for the Spring/Summer collection are tracking ahead of 2014's numbers.
Van de Velde also expects sustained retail growth in the Netherlands and Germany. "We also expect growth in the United Kingdom, although it will be more difficult to obtain than on the continent", the statement said.