Belgian luxury lingerie designer and brands owner Van de Velde is predicting healthy growth for 2010 after recording small turnover and earnings increases in its 2009 annual report.

Turnover increases

Consolidated turnover at the Van de Velde Group rose by 5.3% to €140.1 million, which includes its Sarda brand which was recognised for a full year in 2009, unlike in 2008 when it was only included for the second six months. On a comparable basis (for traditional Van de Velde brands, excluding Sarda), turnover rose by 3.4%. Both the core and growth markets grew by around 3.4% although the growth markets did suffer from the low exchange rates, Van de Velde reported.

Turnover of the group’s own shops (store-to-store) grew by 10%, even after a very strong 2008. The Marie-Jo Boutique in Dortmund was converted to the new 'Oreia' concept in November 2009.

Turnover at Sarda was less satisfactory, falling significantly compared to the previous year. The fall in turnover was mainly experienced in Spain and is connected with general economic developments, the halting of unprofitable sales and other changes, the company said.

Higher gross margin

Gross margin (excluding Sarda) increased; supporting the fact that Van de Velde is pursuing its ‘trading-up’ strategy (high quality, high service) in tough economic conditions. Lower stock write-downs and constant efforts to optimise production costs also had a positive impact on the gross margin, the report said.

Van de Velde says 2009 was a transitional year due to a number of important measures and the non-recurring restructuring cost of €2.9 million. The closure of the production plant in Hungary was completed in 2009. Sarda also underwent restructuring, with the centralisation of logistics services and a number of administrative services from Spain to Belgium.

Earnings

Recurring EBITDA rose by 1.8% in 2009 compared with 2008 to €44.2 million. This does not include the non-recurring restructuring cost of €2.9 million. Sarda had a negative impact on recurring EBITDA. 

Prospects for 2010

Van de Velde expects to see growth in turnover of its traditional brands in the first six months of 2010 in line with the organic growth rhythm of 2009. Initial indicators for the second half point in the same direction, the company says.

The company’s new Oreia store concept was successfully piloted in Germany at the end of 2009 and is now ready to be rolled out further. However, it is expected to have relatively little impact during 2010. The company also reports that its Intimacy brand continues to experience good growth despite tough economic conditions in the United States and growth plans remain intact for 2010.

The company says that necessary cost optimisations were implemented in 2009 and have not curbed growth in any way and the same costs optimisations will positively drive recurring EBITDA and profit in 2010.

Sarda has experienced a tough first semester but the indicators for the second semester point to growth compared with the second six months of 2009. Sarda is said to have found it tougher than expected, but there are clear signs of a turnaround in the second half of 2010, the company said.

Long term strategy

The company is convinced of the merits of a long-term strategy based on developing and expanding brands around the Lingerie Styling concept (fit, style and fashion), especially in Europe and North America.

Van de Velde designs, produces and markets luxurious women’s lingerie under its own brand names. Originally a Belgian company, it continues to conduct all of its core activities in Belgium, including design and product development, prototypes and fitting models, close contacts with suppliers, purchasing policy, fabric checks and cutting, final check, administration and distribution. Management of sales and marketing is also centralised in Belgium. 

Van de Velde's raw materials are almost exclusively sourced from Europe. Only assembly is entrusted to foreign production centres in Tunisia, Hungary, Romania and China. All other production activities, as well as quality assurance, take place in Belgium.