Dear Shareholders and Friends
of the DOUGLAS Group,
The DOUGLAS Group can look back on a satisfactory 2007/08 financial year. We continued with our strategy of value-oriented growth, boosting our consolidated sales by 4.6 percent – adjusted for changes to the portfolio, by a full 8 percent – to over 3.1 billion EUR. Pre-tax earnings rose by 2.8 percent to 147 million EUR. We had forecast an increase in sales of between 4 and 6 percent – or, adjusted for changes in our portfolio, between 7 and 9 percent – and earnings of about 150 million EUR. With these numbers, we achieved both our sales target as well as our earnings goal. Furthermore, we were especially pleased at being able to further boost our DOUGLAS Value Added (DVA) with DVA rising by 3.6 million EUR to 32.8 million EUR.
Investments of more than 155 million EUR resulted in 141 new stores and numerous renovations during the 2007/08 financial year. The majority of these investments again went into our Perfumeries division, which opened 88 new Douglas stores, cementing its leading position in the European market. The comprehensive overhaul of our traditional perfumery on Dortmund’s Westenhellweg proved a particular highlight, with the newly opened store setting new standards in the perfumery segment. In our Books division, we also made substantial progress by opening 29 new bookshops in German-speaking Europe. The key developments included the relocation of our Thalia bookstore in Nuremberg: previously operating under the name Campe, the store has now become Thalia’s flagship and boasts some 4,000 m2 of sales space. At Christ, the year’s highlights included nine new stores and modernization at our stores in Mannheim and at KaDeWe, Berlin’s top department store. At the womenswear specialist AppelrathCüpper, the renovations of our stores in Aachen and Kiel received positive feedback. Hussel also enjoyed considerable success, upgrading many of its confectioneries and – most notably in Austria – sustaining its expansion program.
Even more crucial to our Group’s success than the numerous new stores and renovations, however, was once again our workforce of over 24,000 employees. Their competence and service orientation consistently impresses our customers, sparking their enthusiasm for the specialty stores of the DOUGLAS Group. I would therefore like to express my heartfelt thanks to each and every one of them for their dedication and outstanding work during the 2007/08 fiscal year.
Furthermore, I am thrilled that we – once again – managed to employ so many young people for our 2008 apprenticeship program. With approximately 560 new apprentices, their number is higher than ever. This program does much more than ensure that we have sufficient new staff coming up through our ranks; by supplying top training for these young people as they enter professional life, we are also fulfilling our responsibilities to society. Providing advanced training for our more experienced employees also ranks among our key concerns. After all, their skills and experience are the cornerstones of our Group’s success.
Despite an uncertain economic environment and the turmoil in the financial markets, the DOUGLAS Group got off to a very sound start in its new fiscal year. During the first three months from October to December 2008, we posted a more than respectable sales gain of some 4 percent. While this fell just short of initial projections for the first quarter – particularly in southwestern Europe – it represents a solid platform for the rest of the current financial year.
Our objective now must be to dynamically pursue the goals we have set ourselves and further reinforce the leading positions secured by our divisions – Douglas, Thalia, Christ, Appelrath-Cüpper and Hussel – throughout the German and European retail markets when it comes to service, quality and store ambiance. We have therefore budgeted an investment volume of approximately 140 million EUR for the 2008/09 financial year. Our Douglas perfumeries expect to open about 50 new locations across Europe, with plans to enlarge and modernize numerous existing stores. Expansion activities will focus mainly on improving the division’s positions in its existing markets. By opening some 15 new bookstores, Thalia will continue to grow and consolidate its market leadership in the German-speaking countries. Christ and Hussel will also sustain their earnings-oriented growth strategies by opening new locations. At AppelrathCüpper the management team will be energetically pursuing the restructuring program it launched last year, with the aim of rapidly restoring the company to its former strength. Furthermore, Douglas, Thalia and Christ will also be looking beyond organic growth, seeking to identify potential acquisitions, and acting whenever attractive opportunities arise.
At the present time it is hard – if not impossible – to accurately predict, how consumers will react during the 2009 calendar year. Although numerous retail experts anticipate an especially tough year, we firmly expect the bigger picture to be somewhat brighter. Despite the instability of the financial markets, it is our belief that many customers will still want to indulge in at least a touch of luxury from time to time. These consumers will expect outstanding service, an inviting shopping ambiance and first-rate product ranges at fair prices – shopping criteria that the specialty stores of the DOUGLAS Group are well positioned to meet or exceed.
In the context of the Group’s satisfying performance during the last financial year and the still positive prospects for the future, we would like you – our shareholders – to benefit from our earnings as well. Reflecting our long-term distribution policy, the Supervisory and Executive Boards will be recommending that the Shareholders’ Meeting on March 18, 2009 approve a dividend of 1.10 EUR per dividend-bearing share for the 2007/08 financial year. This represents a total dividend of 43.2 million EUR and a distribution ratio of about 45 percent. While being slightly below our long-term goal of approximately 50 percent, we believe that a dividend of 1.10 EUR is fair and reasonable given the current economic climate.
Hagen, January 2009