Profit at lingerie company Van de Velde went down by 25 % in the first half of the year. The company fears that improvement is not to be expected soon and warns of a “very sharp drop in profits”.
Profit falls as investments go up
Van de Velde’s gross operating profit fell by 25 % to 26.4 million euro in the first half of this year, while net profit fell to 15 million euro (also – 25 %). The decreasing profit is largely due to investments in logistics, more sales channels and IT infrastructure. In the first half of the year, the lingerie producer spent about 7.7 million euro to facilitate tise operation.
Turnover, however, is also falling. Retail sales were disappointing, as shown by the discouraging figures for lingerie brands Marie Jo and PrimaDonna in July, and CEO Erwin Van Laethem now has to admit that the sector remains under pressure worldwide. “Fewer people in the shopping streets and changing shopping behaviour have a negative impact of 2% on turnover in retail,” says the CEO in Belgian newspaper De Tijd. A “slight fall in turnover” can be expected for the entire financial year, as well as a “very sharp fall in profits”, it still sounds.
However, Van de Velde does not want to reduce the pace in which it invests: according to the CEO the investments are necessary to keep up with the changing retail sector and to enable further international growth. “We choose not to cut back on the spending needed to build the scalable platform to achieve future international growth,” he reasons.
