Wolford, the upscale intimates specialist, remains hopeful despite facing a significant annual loss for the 2019/20 full year. The company’s revenues and earnings took a hit due to the COVID-19 crisis, but with a new management board team in place, they are confident in their comprehensive transformation strategy, which is already showing positive results.

Over a 12-month period leading up to April, Wolford experienced a decline in revenues of 13.6% to €118.5 million. This decline can mainly be attributed to the few months of lockdown caused by the pandemic. In March and April, the company saw a massive 60% drop in revenue due to strict lockdown measures and travel restrictions imposed globally.

However, the management board wasted no time in responding to the crisis. They implemented short-time working plans and converted part of their facilities to produce face masks, which helped partially counterbalance the decline in revenues from other sources. Despite their efforts, the operating loss widened from €9 million to €28.7 million compared to the previous year, and the net loss also increased from €11.1 million to €27.42 million.

It’s important to note that the application of the new IFRS 16 lease accounting standard resulted in a decrease in operating expenses by €16.3 million to €37.81 million. Additionally, the successful sale of Wolford’s HQ will contribute to an accounting gain of around €49 million in the current financial year of 2020/21.

To facilitate its transformation, Wolford’s management board introduced the Programme for Immediate Top and Bottom Line Impact (PITBOLI) strategy. This strategy includes various measures such as rightsizing the international store portfolio, reducing rental payments, optimizing purchasing and procurement, and improving efficiency in production and logistics. One significant objective of this strategy is to reduce the time to market for new products by 50%, enabling the company to launch its SS21 collection in a significantly shorter time frame.

Wolford has also made significant investments in its online business, expanding its distribution channels and restructuring its design, marketing, and sales teams. These efforts paid off during the lockdowns, as online sales experienced significant growth. By the end of April, online sales saw like-for-like growth of over 41%, and in June, e-revenues were 54% higher than the previous year, accounting for more than 30% of total revenue.

Additionally, the company has streamlined its product portfolio, focusing on extending the core Wolford brand. The management board emphasizes that the COVID-19 pandemic should not be used as an excuse and that they have thoroughly tested and adjusted their transformation program to ensure its effectiveness and timeliness. They believe that the structural transformation in the fashion industry will intensify in the near future and are committed to driving efficient change.

Despite the challenges posed by the pandemic, Wolford remains optimistic. They view this as an opportunity to review and streamline their brand architecture, making it more accessible and aligned with consumer preferences. The company plans to enhance its digital presence and expand internationally while staying true to the brand’s DNA and values, including a strong commitment to sustainability.

Looking ahead, it is challenging to make accurate predictions given the uncertain circumstances. However, Wolford expects to return to profitability on an operating level in 2021. The gradual reopening of their stores in various countries is a positive sign, with boutiques in Austria, Germany, and Scandinavia reopening from mid-April and those in France, Italy, Spain, and North America reopening from the end of May onwards, and in some cases, from the end of June.

Useful Links:
1. Wolford Official Website: https://www.wolfordshop.com/
2. Transforming Strategies in the Fashion Industry: https://www.researchgate.net/publication/318319008_New_Strategies_in_Strategic_Management_of_the_Fashion_Company