Sales and earnings

Sales forecast slightly exceeded
In this more promising market situation, the DOUGLAS Group increased its net sales by 10.9 percent to 2.7 billion EUR in fiscal year 2005/06, thus slightly surpassing its own goal to increase sales by eight to ten percent. This goal was originally set at six to eight percent but was modified by DOUGLAS during the year in response to positive business developments. Like for like, revenues increased by 2.3 percent. In this calculation, both changes to the group of consolidated companies and new openings and closings during the current fiscal year have been eliminated.

Net sales by division

(Excel Download)

Both German and foreign subsidiaries contributed to this overall positive growth: Sales in Germany were up 8.0 percent. Like for like, this amounts to a 1.2 percent rise. Subsidiaries outside of Germany increased their sales by 24.7 percent, like for like by 4.8 percent. The portion attributable to companies outside of Germany rose to 32.3 percent of consolidated sales compared to 28.7 percent last year.

The Perfumeries division also performed well. This division continued its international growth strategy and further expanded its lead on the European market. As of September 30, 2006, the 937 Douglas perfumeries increased their sales by 13.9 percent to 1.56 billion EUR, thus surpassing their own expectations. Like for like, sales also rose significantly by 3.4 percent.

In Germany, the 433 Douglas perfumeries recorded revenues of 838.5 million EUR; this is equivalent to a 4.3 percent increase. In fiscal year 2005/06, DOUGLAS succeeded in winning additional market shares, thereby continuing to bolster its market leadership. In addition to nine new openings, 12 perfumeries – among these the Düsseldorf- based Parfümerie Schnitzler with its five stores – were acquired and integrated into the DOUGLAS store network during the period under review. Equally responsible for these healthy developments are a variety of product innovations and the new premium perfumeries, which carry particularly high quality body care and cosmetics products.

The 504 perfumeries outside of Germany increased their revenues by 27.7 percent to 720.3 million EUR. Their share of total revenues in the Perfumeries division rose to 46.2 percent following 41.3 percent last year. This vigorous increase of around five percentage points is partly traceable to the Spanish and Portuguese DOUGLAS companies, which have been fully consolidated since the start of the fiscal year. These companies’ revenues were previously consolidated on a prorata (50 percent) basis. Revenues from the French Lavigne Group stores are also now fully consolidated; only July to September 2005 were included in the last fiscal year. In addition, the foreign companies in the Netherlands, Italy, Russia, Poland, Hungary, and the Czech Republic all recorded significant growth in sales.

In the Books division, Thalia matched up to its own expectations. It continues to grow dynamically as a result of several acquisitions and the openings of new retail bookstores. As of September 30, 2006, revenues of the 178 bookstores in Germany, Austria and Switzerland increased by 19.5 percent to 550.9 million EUR. Like for like, this represents a rise in revenues of 1.4 percent.

Revenues at the 134 bookstores in Germany were up by 23.0 percent to 408.5 million EUR. The 26 Gondrom stores also contributed to this positive development. These became part of the Thalia Group on January 1, 2006, and have been rapidly integrated in it. Revenues at the 44 Thalia bookstores in Austria and Switzerland were up 10.5 percent to 142.4 million EUR.

Sales growth in the Jewelry division was mixed. In total, this division recorded a 2.9 percent increase to 296.9 million EUR in fiscal year 2005/06. To ease comparison, the previous year’s revenues have been adjusted for the Gold Meister stores that were sold as of September 6, 2005. Like for like, revenues were 3.4 percent higher.

During fiscal year 2005/06, Christ was able to increase sales in its 195 jewelry stores by 1.1 percent to 247.7 million EUR. While the German jewelry and watch market also witnessed a further downturn in sales, the core Christ brand could continue expanding its excellent position in the mid to upper price segments of the German market. However, like for like, Christ suffered a slight drop in sales. Sales at the seven René Kern jewelry stores in the luxury segment rose by 13.4 percent to 49.2 million EUR. René Kern benefited from the noticeable rise in demand for luxury goods; like for like, revenues rose significantly by 33.5 percent.

In the entire fashion industry, however, both the 2005 fall season and the 2006 spring/summer season provided little satisfaction. This was caused by markedly unfavorable weather conditions. Unfortunately, this also applies to the DOUGLAS Group’s Fashion division with its 15 Appelrath-Cüpper women’s fashion stores and the 11 Pohland menswear stores. Al though revenues in the Fashion division were up by 7.4 percent to 190.6 million EUR, this was due to the acquisition of the remaining interest in Pohland and the corresponding full consolidation as of January 1, 2005. The Pohland sales for the 2004 Christmas quarter are therefore not included in the previous year’s figures. Like for like, sales in the Fashion division fell by 5.9 percent.

Revenue developments at Appelrath-Cüpper were particularly dissatisfying. These declined by 2.4 percent to 137.3 million EUR. Appelrath- Cüpper is nevertheless maintaining its expansion strategy. Two new, large fashion stores were opened in Berlin and Hamburg in September. Revenues at the menswear specialist Pohland totaled 53.3 million EUR, thus down, com pared to revenues in the period October 2004 to September 2005, -1.3 percent on the previous year.

The performance of the Confectionery division was very gratifying in fiscal year 2005/06. Revenues of 79.8 million EUR attained during the period under review surpassed those of the previous year by 5.1 percent. Like for like, sales increased by 2.4 percent. Hussel has succeeded in reinforcing its leading position on the German market, partly thanks to the introduction of innovative confectionery products, and is also advancing its expansion plans in Austria.

Additional information on strategy and the figures for the individual divisions can be found on pages 56 to 91 of this annual report and in the notes to the consolidated financial statements.