• 12 percent sales increase to 3.0 billion EUR
• Pre-tax earnings (EBT) up 13.7 million EUR to 143.1 million EUR
• Operating cash flow exceeds last year's level
• DVA increases once again
Management Report
Business activities and operating environment
An overview of the DOUGLAS Group
The DOUGLAS Group is a leading European retail group with more than 1,800 specialty stores in 21 countries. More than 23,000 employees are now paying tribute to our our motto "Retail with Heart and Mind." They provide our customers with excellent service each and every day, and offer them first-class products at fair prices in an attractive shopping ambiance.
All five business divisions, each with its own brand name, symbolize the lifestyle philosophy of the DOUGLAS Group.
Fig. 9 | Brands of the Douglas Group
Mission, objectives, and strategies
The DOUGLAS Group stands for "Excellence in Retailing." This defines the values underlying all of the company's dealings, and it also describes the corporate culture that characterizes the DOUGLAS Group.
Customers, and the service provided to them, are given the highest priority. Decisions are therefore being made close to the customers' needs, always following the principle "as much decentralization as possible, as much centralization as necessary." These principles are never lost sight of in the pursuit of the company's objectives: strengthening market positions through value-oriented growth, continued global expansion of the Perfumeries division, and the fortification of the leadership position in quality and service.
Strengthening market positions through value-oriented growth
The goal of the DOUGLAS Group is to strengthen and continue expanding the excellent market positions of the five business divisions. Value-oriented growth is the key to this. Considerable potential for the perfumery concept is evident in southern and eastern Europe. The same holds true for the book markets in German-speaking countries, the consolidation of which is being pushed ahead. Each and every planned investment is examined to see whether it contributes to a sustained increase of the corporation's value. Corporate value and its progression are being measured with the help of the DOUGLAS Value Added (DVA) system, which is based on the so-called EVA® concept. The DVA concept states that the DOUGLAS Group and its individual subsidiaries only generate value once they have covered their cost of capital.
Continued global expansion
The most important market for the DOUGLAS Group remains its home terrain of Germany, where 67.7 percent of sales are generated. Nevertheless, international expansion is still being pursued on a steady basis. This is particularly true for the Douglas perfumeries, which are already located in 20 European countries and in the USA. The focus of the DOUGLAS Group's future expansion lies in southern and eastern Europe. Decisive for entering markets in new countries is not only the average buying power of the prospective customers, but the anticipated scale of competition as well.
Fortification of the leadership position in quality and service
Each of the specialty stores in the DOUGLAS Group strives to clearly set itself apart from its respective competitors. With especially friendly employees, competent advice, first-class service, a well-designed product presentation, and high-quality product ranges at attractive prices, the specialty stores wish to set the standard for quality and service. An early recognition of changing trends in customer behavior and customer needs, and responding to them quickly, is a challenge faced each and every day.
Developments in fiscal year 2006/07
The DOUGLAS Group continued its value-oriented growth in the 2006/07 fiscal year. Net sales were up 12.0 percent to 3.0 billion EUR. The DOUGLAS Group thereby fully attained the sales target that had been revised upwards in May; this had predicted an increase between 10 and 12 percent. Like for like, sales too were up 3.3 percent over last year – a welcomed development.
The highest growth rates were attained by the Douglas perfumeries abroad and by the Thalia bookstores within Germany – Douglas primarily through ongoing international expansion, Thalia via numerous new openings and the acquisition of the Buch&Kunst Group on January 1, 2007. Not to mention the other business divisions, which all reported sales increases as well.
Capital expenditure in fiscal year 2006/07 totaled 155.8 million EUR compared to 141.2 million EUR in the previous year. A total of 104 new specialty stores were opened by the DOUGLAS Group in Germany and abroad during the period under review. As of September 30, 2007, the store network is comprised of 1,840 locations.
As of July 1, 2007, the DOUGLAS Group parted with four René Kern jewelry stores, and on September 13, 2007 with its Pohland men's clothing stores. The disposal of these allows the DOUGLAS Group to concentrate its current activities on the Christ brand in the jewelry sector, and on the Appelrath-Cüpper brand in the area of women's fashion.
The Group's pre-tax earnings totaled 143.1 million EUR as compared to 129.4 million EUR the year before. The pre-tax earnings' target of 139 to 142 million EUR was therefore slightly surpassed.
The corporate value of the DOUGLAS Group –measured in terms of DOUGLAS Value Added (DVA) – was increased in fiscal year 2006/07 by 6.1 million EUR to 37.4 million EUR.