German fashion group Escada AG has reported a decline in net profit for the third quarter of 21.8 percent to €4.3 million, “merely due to the advanced collection in the third quarter of fiscal 2004-5 of a dividend payment from an affiliated company�, chief executive Frank Rheinholdt explained. He declined to divulge the name of the affiliated company. Meanwhile, gross earnings rose 13.3 percent to €13.6 million. Group sales rose 5.3 percent to €157.9 million, thanks to strong results in Europe where sales rose 9.4 percent. Sales of the Escada brand increased 5.6 percent to €109.6 million. Rheinholdt said that the three Escada collections – Escada, Escada Sport and the accessories and licenses – had contributed to the growth. “Escada is full on track to achieve its projected year-end results,� he said in a conference call.
The group will welcome new creative director Damiano Biella on 1 October. Rheinholdt commented on the departure of his predecessor Brian Rennie: “Brian was responsible for 12 years of success for the brand after the death of Margaretha Ley, and that’s something no one can take away from him. But the brand has too many images. It’s still a bit too Eighties or Nineties in established markets, though in new markets like Russia , Escada is seen as a younger, contemporary brand.â€? Biella is expected to bring femininity and international flare to the mix and will also over visual merchandising and advertising.
The company’s refurbishment plan of its existing stores is now in full swing. Rheinholdt describes the new look as “clearly more feminine, more luxurious and with another classâ€?. The overhauled stores will debut in Vienna , Hamburg and Munster in October. Store openings will follow in December in Hong Kong , Australia , Mumbai, Beijing , Shanghai and London and in January, Taiwan , Madrid , Beverly Hills and New York will open their new Escada stores. The renovation plan will last two years, during which time no new stores will open. Only once the refurbishment of existing stores is completed, will new stores be rolled out. The company has reserved between $38 million and $44.5 million for the project.
Escada estimated sales growth for the year would be in the mid single-digit range. Gross earnings should increase approximately 10 percent. The company also expects net profit to “record a positive figure�.
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