As anticipated, the Winter Sports industry in 2013 showed some recovery after the declines it experienced as a result of the poor snow in the 2011/12 season and the clearing of excess inventory during the 2012/13 season.
For the year to 31st Dec. 2013, Head’s Winter Sports sales reach €160.0 million ($212mm), up 9.1 percent (13.4 percent c-n) due in part to industry growth but also as a result of the strong momentum of the brand, particularly in skis and boots, as a consequence of the success of the race team and the excellent product offerings.
The Racquet Sports division reported sales of €144.8 million ($192mm), up 1.8 percent (4.1 percent c-n). This growth has been achieved through an increase in the volume of tennis balls sold, particularly in North America, coupled with an improvement in the mix of tennis racquets.
Whilst trading conditions continue to remain tough in Europe for Diving, the division managed a modest increase in sales of 0.9 percent (1.4 percent c-n) due to higher sales in North America and Asia. Sales reached €52.3 million ($60mm).
Sportswear revenues increased by 12.3 percent to €6.6 million ($9mm) due to improved sales of Winter Sports apparel.
Licensing revenues declined by €600,000, or 10.4 percent, to €5.2
million due to a combination of the loss of a contract, bringing
sportswear in-house in the UK and timing of shipments.
Gross margin for the group improved by 80 basis points, which when
combined with improved sales, gave rise to a gross profit of €144.9m
($192mm) compared to €135.9m in 2012.The improvement in gross profit of
nearly €9.0m was offset by cost increases of €6.9m boosted adjusted
operating profit to €12.1m, or 3.4 percent of net sales compared with
3.0 percent in 2012.
The cost increases were driven by €6.0m in selling and marketing due to higher advertising costs in Racquet Sports division and higher departmental costs in both Racquet Sports and Sportswear divisions. In addition, commissions and shipment costs increased due to the increase in sales.
General and administrative expenses also increased by €1.7 million due to higher administration and warehousing costs. These additional costs were offset by an increase in other operating income of €800,000 due to the release of provisions created in prior years, to arrive at the overall cost increase in the year of €6.9m.
Interest and Other Finance Expenses decreased by €800,000 in 2013 compared to 2012 mainly due to lower interest expenses for long-term financing. Tax, interest income and other non-operating items remained broadly flat in the year resulting in net income of €5.3 million, compared with €2.5 million in 2012.
Net cash provided by operating activities for the year amounted to €5.0m compared to €24.8m in 2012. The decline was due to adverse working capital movements. The higher Winter Sports sales during 2013 pushed up year end receivables compared to the relatively low level of receivables at the end of 2012 when sales during that year where not as strong.
In 2014, Head foresees continued financial pressure on consumers and negative impact from the warm winter in some parts of Europe offset by the success of the company’s athletes.
By press release
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