Annual Report 2009/10 Excellence in Retailing - Douglas Holding

32 Management Report
Key results
Business activities and operating environment
Net assets, financial position and result of operations
DOUGLAS HOLDING AG
Subsequent events
Control system and success factors
Opportunities and risks situation
Statutory disclosures
Forecast and overall assessment
sible. The local employees are allowed the greatest possible scope of entrepreneurial activity
to fulfill the customer’s wishes quickly and uncomplicatedly. By contrast, a centralized
system can be found in the administrative department to enable an efficient controlling of
the Group. For example, this is evident in the real estate, treasury and tax departments.
Even supportive services such as bookkeeping or payroll accounting are bundled in one
company and centrally rendered for the significant operating companies.
For purposes of attaining measurable business controlling, the Executive Board determines
annual target values for sales and earnings before taxes (EBT) as well as key performance
indicators based on the DOUGLAS Value Added concept (DVA). The DOUGLAS
Group’s positioning in the existing markets in comparison to competitors is of particular
importance for achieving the sales and earnings targets. Therefore, the focus is to further
secure the market positions in existing European markets. That is why the Douglas perfumeries
have ceased their operations during the past two fiscal years in Slovakia, Estonia,
Denmark and in the USA. Furthermore, the Russian subsidiaries have been classified
as held for sale, because their disposal is deemed to be more than likely as of the balance
sheet date. Special importance will be attached in the future to the German home market,
which has proven to be a crucial pillar for the DOUGLAS Group in the last two fiscal years
in the wake of the challenging consumer environment. Market entry into new countries
is not planned at the present time.
The Executive Board’s overall assessment of business developments in the 2009/10
fiscal year
Against continuously difficult consumer conditions, the DOUGLAS Group delivered a
respectable performance in the reporting period, increasing net sales by 3.7 percent to 3.3
billion EUR. Alongside the solid performance in Germany, the first time full consolidation
of buch.de internetstores AG (buch.de), Münster, as of December 1, 2009, also contributed
to the sales growth.
On a comparative basis (hereinafter referred to as “like-for-like”), which reflects only
those stores that operated during both the reporting and the comparable prior periods,
net sales saw a slight gain of 0.4 percent, thus reaching the prior year’s level. In Germany,
sales and like-for-like sales increased. However, like-for-like sales outside of Germany
remained behind the previous year due to the continued difficult economic conditions.
In the first quarter of the 2009/10 fiscal year, which represents the all-important Christmas
quarter, the DOUGLAS Group did not succeed in completely detaching itself from the
challenging consumer environment in some foreign markets and the restrained sales performance
in the German retail sector. Despite these factors, the first quarter performed
quite satisfactory. The second quarter benefited from the earlier Easter business. Based on
the half-year figures (from October to March), the Executive Board formalized the annual
guidance by anticipating that the upper end of the targets for sales and earnings before
taxes would be reached. The projected range for sales growth was between 0 to 2 percent
and pre-tax earnings between 120 and 130 million EUR. The third quarter was negatively
impacted by the shift in Easter business and the ongoing difficult business outside of Germany.
Moreover, the planned investment volume of 120 million EUR was adjusted, because
the projected amount would have only been exhausted by an amount of between 100 and
110 million EUR. While the fourth quarter noted a recovery in consumer demand in Germany,
the sales performance delivered abroad was still unsatisfactory.