PDF - Part of the Annual Report - Ludwig Beck

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Management Report | 41 Retail trade Sales in the German retail clothing sector continued to fall in 2001. The expected boost to spending from tax reforms failed to take place, as high unemployment and strong price rises for food and fuel dampened demand. In the south of Germany, retailers were also hit by the effects of freak weather conditions: an exceptionally cold April and the warmest October since records began, meant that both seasons got off to a miserable start with sales down 7% on the respective periods in the previous year (source: trade journal “Textilwirtschaft”). For 2001 as a whole, the retail clothing sector recorded a decline of 2% on the previous year (“Textilwirtschaft”). Weak demand coupled with the abolition of Germany’s Rebates Act resulted in a flurry of spectacular discounts, the like of which had not been seen before in the retail clothing sector. The price cuts provoked some strong reactions among manufacturers, retailers and trade associations. Sales The Ludwig Beck Group was unable to escape the effects of a weaker German economy in the past year, recording a decline of 2.4% in gross sales to € 98.0 (100.3) million. Despite the fall in sales, however, inventories remained stable at € 9.2 (9.1) million and further improvements were made to the age structure of stock. There were large discrepancies between the development of sales in various product categories. Whereas clothing tended to suffer most from the general economic downturn, sales of cosmetic products recorded growth of 24% to € 4.8 (3.9) million – a clear indication of the growing importance of this segment. On September 5, the new Augsburg store with 1,300 square metres (m 2 ) of floor space was opened on schedule in the town’s central “City Galerie” shopping mall. The company’s Hamburg store was closed on September 30 as the premises could be successfully sublet to a new tenant. With a retail area of just 240 m 2 the store no longer played a significant role in the company’s future strategy. MANAGEMENT REPORT
42 | Management Report Profit and loss account for Ludwig Beck AG 2001 2001 2000 2000 € million in % € million in % Net sales 84.4 100.0 86.5 100.0 Total other operating income 2.8 3.3 1.9 2.2 87.1 103.3 88.4 102.2 Material expenses 43.9 52.1 44.5 51.4 Total other operating expenses 37.9 44.8 37.4 43.3 Operating result (EBIT) 5.4 6.4 6.5 7.5 Financial result -1.6 -2.0 -0.9 -1.0 Result from ordinary activities 3.7 4.4 5.6 6.5 Taxes 0.0 0.0 0.0 0.0 Net income 3.7 4.4 5.6 6.5 Earnings In view of the clear signs of an impending economic downturn, Ludwig Beck AG already began taking measures to cut costs in spring last year. These cost reduction measures were applied to all cost categories and achieved savings of almost € 2 million. Thanks mainly to this strict cost management strategy, the company was able to record an operating result (EBIT) of € 5.4 (6.5) million in 2001. Other operating income and other operating expenditure should be regarded together, but are not allowed by German Commercial Law (HGB) to be netted off against each other.
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