Tendam’s revenues were buoyed by impressive fourth quarter growth (+6.4%) and consistent quarter-on-quarter improvement over the course of the year.
All group brands reported growth in like-for-like sales.
Online sales increased by 28% to represent almost 10% of total sales in Spain in 2019. Tendam expects to triple its digital business over the next three years.
Gross margin continued to climb, standing at 62% (+0.2 percentage points), coupled with a year-on-year reduction of 4.8 million euros in stock at year-end.
Adjusted EBITDA pre-IFRS 16 totalled 162 million euros. Accounting for IFRS 16, it stood at 297 million euros.
Tendam Brands, the parent company of the Tendam Group, one of Europe’s leading fashion retailers operating in the specialised chain segment through the brands Cortefiel, Pedro del Hierro, Springfield, Women’secret and Fifty, has announced the results for its 2019/2020 financial year, running from 1 March 2019 to 29 February 2020.
Jaume Miquel, Tendam Chairman and CEO, said: “We are pleased with our Group’s performance in 2019. Tendam posted robust growth in the online business which has more than doubled our marginal profit, as well as strong like-for-like sales across all brands and constant improvements in footfall at physical stores. The company has continued to grow its gross margin and further optimise stock levels.”
Tendam’s revenues increased by 3.2% year-on-year from 1.15 billion euros last financial year to 1.19 billion euros. All Tendam brands posted like-for-like sales growth, and footfall at physical stores increased gradually over the course of the year. Fourth quarter sales were up by 6.4% in total and by 5% in like-for-like terms.
Online sales grew by 28% over the year and by 30.5% in Q4, representing almost 10% of total sales in Spain in 2019.
Gross margin climbed 0.2 percentage points to 62%, underpinned by strong brand positioning and effective management of stock, which totalled 164.4 million euros at the end of February, down by almost five million euros versus February 2019.
Adjusted EBITDA pre-IFRS 16 amounted to 162 million euros, versus 161.7 million euros in 2018. Accounting for IFRS 16, adjusted EBITDA totalled 297 million euros.
Tendam closed the year with the strongest financial position in 15 years. At year-end, the company reported improved free cash flow excluding interest of 83.1 million euros, up by 14.2 million euros or up 20.6% versus February 2019. Net debt totalled 430.6 million euros, which represents a debt-to-EBITDA ratio of 2.7x, down from 2.8x the previous year. Pre-IFRS 16, profit before tax rose by 0.5% to 81.2 million euros.
As part of its business model, Tendam has continued to recruit customers to its loyalty programmes, which currently have a total of over 26 million members, up 9% versus last year.
Tendam’s goal – inextricably linked to the growth of its loyalty programmes – is to triple its online business over the next three years, which will have a positive impact on profitability.
On the subject of the current and future performance of online sales, Jaume Miquel stated: “The outstanding results of our online business, which grew by 28% in 2019 and affords twice the marginal profit of our physical stores, is thanks to our own particular ecosystem: powerful, sector-leading brands, advanced management of our member base, constant digital investment and a flexible, far-reaching network of stores which is customer-centric and fully engaged with the digital world. This structure has allowed us to achieve best-practice levels of product returns and last mile profitability. This business model, which is underpinned by the company’s rapid investment in digitalisation, will allow us to continue to enhance our Group’s profitability whilst tripling online sales over the next three years.”
In 2019, the company furthered its existing commitment to sustainability. Tendam cut CO2 emissions by 30% and signed up to both the Fashion Pact, to fight climate change, support biodiversity and protect the oceans, and the United Nations’ Business Ambition for 1.5º C. Tendam has also agreed to convert to solely renewable energies across all facilities in Spain during 2020, among other initiatives. In terms of products, the company has extended its sustainable collections across all of its brands, and over 50% of its denim is now in the H20 line, offering water savings of up to 90%.
Events after the reporting period. Covid-19
Tendam’s efforts have been geared toward two key goals: protecting the health of the company – which means protecting the health of employees, customers and partners, as well as financial protection in terms of cash – and actively helping to minimise the social impact of the Covid-19 crisis.
These efforts included active stock management and paring back operating costs and non-strategic investments. On the financial side, the company extended its financial capacity via it revolving credit line and an additional loan of 132.5 million euros, backed by Spain’s Official Credit Institute (ICO).
In terms of social initiatives, Tendam topped up the salaries of all furloughed employees to 100% during the State of Emergency as well as offering them interest-free microloans, which were taken up by over 2,000 employees. The company made its resources fully available to the health authorities, care homes and hospitals, managing the acquisition of over 1 million euros’ worth of medical supplies (part of which was fully-funded by Tendam and part on behalf of other companies, such as Openbank and CLH). In addition, through the initiative #TodosSumamos-El hilo que nos une, the Group donated over 50,000 garments to hospital patients and healthcare professionals. These donations, coupled with other initiatives, totalled over a million euros’ worth of products.
“We firmly believe that Tendam is extremely well-positioned to lead the sector into the future, which will be shaped by five key trends: exponential growth in online business, more responsible consumers, fashion which is more timeless but offers greater added value, the need to integrate sustainability into every facet of our lives and companies taking a more active role in contributing to a better society,” concluded Tendam Chairman and CEO Jaume Miquel.