Dear Shareholders and Friends
of the DOUGLAS Group,
The 2006/07 financial year proved a successful year for the DOUGLAS Group, as we systematically advanced our strategy of value-oriented growth. Thanks to a 12 percent increase in sales during the period, total turnover passed the 3 billion EUR threshold for the first time. Earnings before taxes were also significantly higher at 143 million EUR. As a consequence, we once again achieved our ambitious targets. We were especially pleased at being able to further boost DOUGLAS Value Added (DVA) in fiscal 2006/07, with this index rising by 6.1 million EUR to 37.4 million EUR, its highest level ever.
The positive trend in the DOUGLAS Group was sustained across its five divisions. Our Douglas perfumeries posted substantial sales gains and extended their status as the European market leader. As the result of a number of successful acquisitions Thalia further improved its solid position in the German-language retail bookselling segment. Our Christ jewelry stores further cemented their strong position in the German watch and jewelry market. And our womenswear specialist Appelrath-Cüpper also reported solid sales growth. In addition we were very pleased with our Hussel confectioneries, whose total sales surpassed 100 million EUR for the first time.
Our workforce of over 23,000 employees was yet again crucial to our success in fiscal 2006/07. Their warmth and sincerity, the professional sales assistance they provide, and above all the enthusiasm that they bring to their jobs, are all critical factors when it comes to winning over customers. On behalf of both myself and my colleagues on the Executive Board, I would like to express my deep gratitude to each and every one of these ladies and gentlemen.
I am also very happy that we managed to create so many new apprenticeships during the current training year. With over 530 young women and men joining our ranks, the number of apprentices in Germany is higher than ever. By offering sound professional training to young people, we are not only building for the future; we are also fulfilling our responsibility to "give back" to society. The fact that the current total of over 1,400 trainees are happy and feel they are getting the support they need, is something I hear repeatedly when I visit our stores.
Needless to say, we would like you – our shareholders – to benefit from the positive performance of the DOUGLAS Group as well. For this reason, the Supervisory and Executive Boards will be recommending that the Shareholders' Meeting approve a dividend of 1.10 EUR per dividend-bearing share for the 2006/07 financial year. This represents a distribution ratio of 49 percent of the consolidated net income, once again underscoring our commitment to the shareholder-friendly dividend policy which we have pursued for many years.
The DOUGLAS Group is set to post renewed earnings-oriented growth in the current fiscal year. An investment volume of approximately 155 million EUR has been put aside to modernize the Group's existing locations, and above all to further expand our store network. With the divestment of Pohland and René Kern, we have now completed the restructuring of our current portfolio, which offers plenty of potential for further bolstering future earnings.
Our Douglas perfumeries alone are planning to open some 80 new locations. The inauguration of our 1000th Douglas perfumery in downtown Madrid in October 2007 sparked a flurry of events. In mid-December the first Douglas perfumery in Rumania opened its doors. Additionally, as part of a joint venture, we acquired interests in three perfumeries in Bulgaria at the beginning of 2008. Preparations are simultaneously under way to launch operations in Greece and on the Arabian Peninsula.
Thalia too will continue to post rapid growth with the goal of extending its already strong position in German-speaking Europe. Likewise, Christ and Hussel are looking to open the new venues that will power their ongoing growth. At Appelrath-Cüpper, the focus will be on restoring the company to its former stature by honing its brand image.
We will continue to adhere to our strategy of value-oriented growth during the year. And we will be abiding by our principle of decentralization by giving our store employees the maximum possible authority and scope to decide locally. We are keenly aware that our ability to make quick, unbureaucratic decisions at a local level enables us to better satisfy the needs of our customers.
The DOUGLAS Group is on course for yet another positive performance in the current financial year. All in all, the beginning of the new fiscal period proved satisfactory, despite holiday season sales falling somewhat short of retailers' expectations – specifically in the German market. The first quarter from October to December 2007 showed sales up by 5.9 percent, building a solid platform for the remaining nine months. The goal now must be to dynamically pursue the targets we have set ourselves and further extend 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 shopping ambiance.
For the 2007/08 financial year the DOUGLAS-Group's motto will be "Successful together." Our aim is to encourage teamwork and to enhance the spirit of partnership. We want to remind everyone on board that individuals are only as strong as their teams and that the whole is always greater than the sum of its parts. Success can only be achieved if the whole team wants it and if everyone works together towards it. I would be very pleased, if you – dear shareholders – would accompany us on this exciting mission.