The equity markets developed adversely in the 2007/08 fiscal year in light of the global financial crisis and the overall higher energy and raw materials prices. Following a severe drop in the stock price at the beginning of the 2008 calendar year, the US banking crisis spread during the course of the year causing investors to lose trust and increasing volatility on the equity markets. Recessionary fears first experienced in the summer persistently aggravated the mood on the global stock exchanges.
The DOUGLAS Share
The German equity index, DAX, stood at 7,862 points at the beginning of DOUGLAS HOLDING AG’s fiscal year on October 1, 2007. It fell by 26 percent over the following twelve months and closed at 5,831 points on September 30, 2008. Comparatively heavier losses were suffered by the MDAX, which also lists the DOUGLAS shares. The index lost about 33 percent over the same period, closing at 6,957 points. The performance of the German retail stocks is tracked in the Prime Retail sector index. The index’s sharp drop of nearly 45 percent in the reporting period reflects the deteriorated domestic fundamental data and the capital market’s fears of a collapse in consumer demand in Germany. The intense rise in energy prices and the anticipated effects of the international financial crisis on the real economy acutely dampened the investor’s expectations of the equity markets.
Fig. 2 | Maximum and minimum price of the DOUGLAS share in fiscal year 2007/08 (in EUR)
The DOUGLAS shares could not succeed in escaping from the turbulent environment on the capital market. However, the stock drop was lower than the comparative MDAX and Prime Retail indices. On October 10, 2007, the DOUGLAS share reached its yearly high of 45.04 EUR for the 2007/08 fiscal year. The stock closed on XETRA at 32.24 EUR on September 30, 2008, representing a contraction of about 26 percent over the fiscal year. Taking into account the 2006/07 dividend of 1.10 EUR per share, this translates into negative value of around 24 percent. The market responded positively to the favorable opinions given by analysts, the accelerated value-oriented organic growth and targeted acquisitions, especially in the Perfumeries division, thus stabilizing the stock price during the year.