ANNUAL REPORT 2020

(MAY 2020 - DECEMBER 2020)

Contents

MANAGEMENT BOARD FOREWORD ..................................

4

THE COMPANY..................................................................

8

WOLFORD SHARES ..........................................................

11

CORPORATE GOVERNANCE REPORT.................................

14

SUPERVISORY BOARD REPORT...........................................

23

OVERVIEW OF KEY FIGURES (5 YEARS)..............................

25

MANAGEMENT REPORT ...................................................

26

CONSOLIDATED FINANCIAL STATEMENTS .........................

46

RESPONSIBILITY STATEMENT ...........................................

100

UNQUALIFIED AUDIT OPINION .......................................

101

SERVICE ........................................................................

110

W O L F O R D

A N N U A L R E P O R T 2 0 2 0

Andrew Thorndike (COO) and Silvia Azzali (CCO)

Management Board

Foreword

Dear Shareholders,

Dear Ladies and Gentlemen,

The short fiscal year from May to December 2020 followed the principle that the only constant is change. Following the reopening of stores in Europe, the USA, and China after the first wave of Covid-19 in the second quarter of 2020, the renewed lockdown in Europe since October 2020 has led to significant business losses, which will extend in all probability, into the second half of 2021. Nevertheless, we were able to generate sales of €68.0 million and therefore limit the decline in sales to €22.8 million (approx. 25%) compared to the same period of the previous year (May to December 2019).

Strong short fiscal year despite Covid-19: Company able to pay off debt under its own management, earnings significantly higher than previous year

Despite the sales losses due to Covid-19, we achieved a result (Group Profit/Loss) of €+12.8 million and therefore significantly exceeded previous year's result of €-14.5 million. This figure includes the effects of the sale of real estate and the change in the value of right-of-use assets following the implementation of impairment tests. As reported, the purchase price of €72 million for the property at Wolfordstrasse 1-3 in Bregenz was used at the beginning of May to pay off all debt.

M A N A G E M E N T B O A R D F O R E W O R D

PA G E S 4 - 5

We made good use of the 8 months of the short fiscal year and implemented further restructuring measures. In particular, we were able systematically implement the stringent plan for the sustainable realignment of Wolford.

Personnel costs reduced by more than 20%, online sales increased by 45%, sales of Wolford Care Masks exceeded €10 million

Due to the implementation of our restructuring program "PITBOLI" (Program for Immediate Top and Bottom Line Impact), the planned measures were launched at the beginning of 2020 and we achieved our ambitious sales and efficiency effects accordingly. The restructuring program "PITBOLI" thereby delivered a reduction of a further 20% year-on-year on the personnel cost side. The implementation of extensive additional measures in cash management ensured sufficient liquidity throughout the short fiscal year. The cash flow in the short financial year increased by € 9.7 million.

In the reporting period, online sales have been the main growth drivers, with a 45 % increase year-on-year. The revenue share of the company's own online business and the associated online business of its wholesale partners increased to a total of around 21%. Our retail and wholesale business also contributed to achieving sales. Both the Spring Summer 2020 and the Fall-Winter 2020/21 collection were very well received in all channels. To date, a revenue of €10 million has been generated through the sale of approximately 700,000 Wolford Care Masks since the beginning of production in March 2020. As a new accessory, the different styles of the Wolford Care Mask have become a must-have of the Wolford product range.

Brand architecture extended, sales presence internationally strengthened

The "The W" and "W lab" collections were also successfully incorporated into the brand architecture and are part of the new face of the Wolford brand. The collaboration with adidas has significantly exceeded expectations, as well as the launch of "The W" on the online platform Farfetch. Furthermore, a relaunch of the Essential Collection has started, which will be implemented in the upcoming months with targeted campaigns. With the Aurora Monogram products, part of "The W" collection, we continue to increase our commitment to sustainability. All new Aurora Styles are Cradle to Cradle Gold Certified™. Our goal is to be the first eco-neutral brand in the fashion industry.

Wolford's strategy to expand its presence in Poland, Scandinavia, United Arabic Emirates, Central America, and Japan is also successfully implemented. We have reached partnership agreements with well-established agencies and distributors to leverage their markets' knowledge and presence in their respective territories. All partners have been chosen for their deep understanding of the apparel business through focused distribution, and several multi-brand doors have been opened during 2020.

Outlook: Break-even feasible in 2021

With strong results from 2020 and prospective planning for 2021, we currently expect to confirm a sustainable break-even(positive operative result), provided our assumptions on the development of the Covid-19 pandemic remain valid. As of March 31, 2021, we have closed the first quarter of the current fiscal year with earnings (Group profit/loss) 22.4% higher than the previous year, thanks to our strict consolidation course, despite the ongoing store closures in Europe as a result of Covid-19 related lockdowns. Encouraging factors here were not only the continued success on the cost side, which is well ahead of plan, but above all a gross profit margin of 82.1%, 1.7 percentage points higher than in the same period of the previous year. Due to numerous additional sales measures such as remote selling and streaming, March sales was almost €2 million (38%) higher than March sales in 2020.

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Wolford AG published this content on 28 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 May 2021 13:48:26 UTC.