The DOUGLAS Share
In fiscal year 2010/11 the international stock markets could not carry forward with their pleasing performance of the previous year. Positive business figures and hopes of stable growth in the global economy in the first nine months of fiscal year 2010/11 initially led to cautious optimism on the global capital markets and rising stock prices. However, the sharply deteriorating EU State debt crisis in southern Europe and growing uncertainty about the stability of the international bank system caused a share price slide on the international security exchanges starting in mid-2011. The global economic outlook significantly clouded over. The world economy did not receive any positive impetus in this environment from the US, where the economic performance remained well behind expectations despite expansionary monetary and fiscal policy.
The domestic economy in Germany detached itself to a large extent from the economic cool down in Europe during the reporting period as a result of a favorable and persistently high demand for German products from abroad and particularly from emerging economies. Private consumption developed better than in other European countries due to low unemployment rates and expected wage growth. The projected growth weakening in the emerging markets, persistent recessionary fears in the Euro-crisis countries as well as the confidence crisis in the financial system, however, dampen the further economic outlook for Germany, too.
The German stock index, DAX, stood at 6,244 points at the beginning of DOUGLAS HOLDING AG’s 2010/11 fiscal year on October 1, 2010, sharply rising to 7,528 points until early May 2011. In the following months the DAX suffered high share price fluctuations and substantial losses, closing at 5,502 points as of the balance sheet date on September 30, 2011. This corresponded to a minus of 11.9 percent based on the fiscal year. The MDAX, which lists the DOUGLAS shares, also delivered a negative performance. Based on a very volatile share price movement during the same period, the index remained 5.1 percent behind the same date last year, closing at 8,341 points after hitting the highest level of the year of 11,187 points on July 7, 2011. The performance of the German retail stocks is tracked in the DAXsector Retail index. This sector index also fell sharply by 21.1 percent to 254 points during the period under review. The weak performances delivered by the German stock indices reflect the stability crisis in the Euro region and the anticipated economic slowdown. These risks were weighted more heavily by the financial market participants than the positive economic fundamental data in Germany.
Declining share price performance
The DOUGLAS share did not manage to uphold the prior year’s share price level in a turbulent capital market environment. The DOUGLAS share closed on XETRA at EUR 29.52 on September 30, 2011, after starting at EUR 36.70 at the beginning of the fiscal year; this represented a significant drop of 19.6 percent. Taking into account the 2009/10 dividend of EUR 1.10 per share, this translates into a negative performance of 16.6 percent. On December 7, 2010, the DOUGLAS share reached its yearly high of EUR 43.20 for the 2010/11 fiscal year as boosted by positive expectations for a dynamic economic development in Germany and recorded its yearly low at EUR 26.87 on September 12, 2011. The share price responded in line with the critical opinions given by analysts at the beginning of 2011. Due to the economic risks in the Euro region, analysts feared lasting growth weaknesses abroad and a drop in private consumption demand in Germany. The accelerated global structural shifts in the book industry and the associated uncertainties about the further development of the bookselling subsidiary, Thalia, also contributed to the reserved assessment of the DOUGLAS share on the capital market.