Underwear Brand Wolford's Latest Decline Of 8% Will Force The Chinese Market

In July 23rd, China's Wolford, a luxury underwear brand in Austria, published its financial data for 2018/19 fiscal year. Affected by the weakness of Western European market, Wolford net sales fell 8% to 137 million euros compared with the same period last year. However, despite the poor sales performance, Wolford's deficit has improved.

Derogation measures are beginning to bear fruit.

Wolford, founded in 1950, is famous for its seamless top tights, tights, underwear, women's wear and accessories, especially in seamless tights. However, over the past two years, due to a continuous loss, the demand for high-end tights, underwear and T-shirts has fallen sharply. To this end, Wolford has adopted a series of measures to reduce losses and expect to achieve profitability in the 2020/2021 financial year.

The restructuring strategy worked: in the 2018/2019 fiscal year, the restructuring strategy helped Wolford save 11 million 850 thousand euros. After streamlining the closure of the company's administrative and production departments in Bregenz, the number of Wolford employees dropped to 1347, the cost of personnel dropped to 60 million 240 thousand euros, and other operating expenses also decreased. At the same time, Wolford has also optimized the sales team to ensure that marketing activities are unified and responsible by the Milan sales team.

Increased brand and product investment: in July 2018, Wolford increased its capital contribution, and its share capital increased from 30% to 36%. As of April 30, 2019, Wolford's total share capital was 42 million 720 thousand euros, 8 million 820 thousand euros higher than the 33 million 900 thousand euros in the previous fiscal year. In August 2018, Wolford introduced a brand new visual identity scheme for young European consumers and launched a new concept of window display. The concept was launched in Amsterdam and Paris stores, and was well received by consumers. In September 2019, Wolford launched the first sports leisure series "ATH_W", which is also welcomed by consumers.

Developing the Chinese market

With the rapid growth of China's high-end consumer market, Wolford and other overseas brands have begun to work hard to develop the Chinese market.

In March last year, "gorgeous ambition" reported that China Fosun International Group acquired the controlling stake of Wolford at the price of 55 million euros. Since February 1st this year, Fosun international has officially acted as a new partner of Wolford in the Chinese market and fully supports the brand image of the company in the Chinese market. (see: Fosun international holding Austria luxury underwear brand Wolford 55 million euro)

Wolford said that in the short term, the Chinese market will not bring huge profits to the company, but in the medium term, the future Chinese market will be equivalent to the US and German markets, contributing to the total sales volume of Wolford 15%-20%.

From May 2018 to April 2019, the key financial data for Wolford 2018/2019 fiscal year are as follows:

Net sales fell 8% to 137 million euros compared with the same period last year.

Operating losses narrowed slightly, and losses fell 3% to 8 million 980 thousand euros, down from 9 million 220 thousand euros in the 2017/2018 fiscal year.

Net losses also narrowed, and losses fell 4% to 11 million 100 thousand euros over the same period, better than 11 million 530 thousand euros in the 2017/2018 fiscal year.