03.04.2012 | Hamburg
Preliminary figures of the Otto Group for the financial year 2011/2012
Preliminary results indicate that the Otto Group, Hamburg, Germany, grew its revenue in the previous financial year 2011/2012 (29 February) by 1.5 percent from 11.4 billion euros to 11.6 billion euros. Adjusted for currency effects, business expanded by 2.2 percent. "Following the resounding growth of 12.6 percent achieved last year, as we announced, the Group has maintained its course of ongoing growth in the face of a difficult economic environment," emphasised Hans-Otto Schrader, Chief Executive Officer of the Otto Group. Revenues in the segments Financial Services and Services, and in e-commerce posted above-average growth. Renewed high sales growth in Russia was particularly satisfying. In contrast, however, developments in France were somewhat sluggish.
Earnings performance based on this initial forecast was below average. As the Group announced in December 2011, rising raw materials and factor costs, unfavourable consumption trends in a number of countries and weak earnings posted by some Group companies keep earnings performance below the level of 2010/2011.
All three segments in the Otto Group posted growth in. Following substantial growth recorded in the prior year, the Multichannel Retail segment ended this current year slightly up, growing revenues by 0.2 percent to 10 billion euros (currency adjusted, 0.8 percent to 10.1 billion euros). The Service segment, driven largely by the international Hermes group of services companies, grew external revenue by 9.1 percent to 1.031 billion euros, and thus crossed the one-billion-euro threshold for the first time. Developments were even more successful in Financial Services, a segment marked by the EOS Group. Following double-digit growth to 455 million euros in the prior year, revenues for the segment were up 16 percent to 528 million euros in 2011/2012.
Equally satisfying were developments for the Otto Group's most important sales channel - web-based retailing. Preliminary forecasts indicate that web sales grew by 9.2 percent from 4.8 billion euros to 5.3 billion euros. Consequently the Otto Group’s more than 50 online platforms accounted for 53 percent of all retail sales in the Multichannel Retail segment. In Germany, e-commerce revenues increased by 9 percent from 3.1 billion euros to 3.3 billion euros, accounting for nearly 58 percent of the Group's retail sales. In doing so, the Otto Group maintained its position as the world’s biggest online retailer for fashion and lifestyle products and the world's second largest web retailer overall.
The picture painted by the results forecast for the individual Group companies within the Multichannel Retail segment in Germany is, almost without exception, positive. Earnings at the Group's core business, OTTO, were virtually stable following a year of tremendous sales growth in 2010/2011. Revenues achieved at the company fell slightly - by 2.1 percent to 2.069 billion euros. Internet business continued to rise and now accounts for 75 percent of company revenues. The Bonprix Group also posted encouraging developments, achieving sales growth of 2.5 percent, from 1.136 billion euros to 1.165 billion euros. The Witt Group posted growth of 2.2 percent from 629 million euros to 643 million euros. Following outstanding growth of more than 22 percent in the prior year, Baur revenues grew by 1.2 percent to 616 million euros in the year under review. The Heine Group reported a drop in revenues of 3.6 percent to 527 million euros. The Schwab Group, which includes the Schwab, Sheego and MyToys brands, posted 8.5 percent growth from 464 million euros to 503 million euros. Sportscheck bucked the downward market trend and increased earnings to 346 million euros, a corresponding growth rate of 5.9 percent.
On an international level, business activities in France went through a difficult period. Companies belonging to 3 Suisses International witnessed a decline in sales of 5.6 percent to 1.980 billion euros. This was due in part to the somewhat depressed consumer market for fashion and the restructuring of the distance selling business model in France. In the UK, Freemans Grattan Holdings underwent another deliberate cut in turnover as part of corporate restructuring. As scheduled, revenues fell further from 199 million euros to 164 million euros - with the company now moving into the profit zone. Overall in Europe (excluding Germany, but including France and Russia), the Otto Group achieved revenue growth of 3.1 percent to 3.516 billion euros.
Business developments in North America were encouraging. Despite the trying economic environment, sales revenues rose by 4.4 percent adjusted for currency effects. This was largely generated by houseware and furniture specialist Crate and Barrel. Because of the exchange rate, the economic region posted a slight drop of 0.4 percent to 1.148 billion euros. Business in Asia was characterised by some extraordinary events. Despite the tsunami and nuclear disasters in their country, the Otto Japan Group was able to maintain revenue levels at 227 million euros. In the light of these extraordinary circumstances, this is undoubtedly a major success for the Japanese team. Overall, revenues in Asia fell by 8.5 percent from 268 million euros to 246 million euros. This was largely attributable to the disposal of Otto Korea.
Taking account of all developments, it is once again the performance of the Otto Group in Russia which stands out in the financial year 2011/2012. Otto Group Russia and its brands achieved the largest sales growth across all major companies. Revenues were up 34.6 percent to 474 million euros, despite negative currency effects. "The fact that the Otto Group Russia can achieve revenues of half a billion euros in just five years of rigorous expansion is a huge success and fillip to expanding in new markets," explains CEO Hans-Otto Schrader with an eye on the successful market launch in Brazil in 2011.
The preliminary figures indicate that the number of employees rose by 4,500 in the past year to around 54,200.
"This past financial year was affected by a range of challenging market conditions, it was a year in which we successfully held our ground," explains Schrader. "The financial year ahead will be no less challenging." For the forthcoming year, the Otto Group is planning targeted investments in e-commerce, in services and promising international markets, and disinvestments in companies that do not achieve sustained profitability. "Our goal is to secure further moderate growth with a significant increase in profits," emphasised Schrader.
Founded in Germany in 1949, today the Otto Group is a globally operating retail and services group with around 53,800 employees (as at February 2013). The Group includes 123 major companies and is present in over 20 countries in Europe, North and South America and Asia. Its business activities are grouped into three segments: Multichannel Retail, Financial Services and Service. In the 2012/13 financial year (to 28 February), the Otto Group generated turnover of 11.8 billion euros. It is the world’s second-largest online retailer and the largest online retailer for fashion and lifestyle in Europe in the end-consumer business (B2C).
E-commerce, catalogue sales and over-the-counter retail are the three pillars of the Otto Group’s Multichannel Retail strategy. Worldwide corporate activities and a variety of strategic partnerships and joint ventures provide the Otto Group with excellent opportunities for know-how transfer and leveraging available synergy potential. Group companies operate largely independently, guaranteeing flexibility, customer proximity and optimum target-group appeal in their respective country markets.