DGAP-News: Adler Modemärkte AG / Key word(s): Strategic Company Decision
Press Release from Adler Modemärkte AG
Back to Profitable Growth with "New ADLER"
Haibach (near Aschaffenburg), 7 October 2020: Adler Modemärkte AG today unveiled its "New ADLER" initiative, a comprehensive package of strategic measures designed to bring the Company back to sustainable and profitable growth by 2023. This project entails systematic improvements to the already successful physical business in more than 170 brick-and-mortar stores, while significantly expanding online activities. The aim is to lift consolidated revenue to €560 million by 2023, with roughly €500 million being generated in the stores and at least €60 million earned online. Before the crisis hit, revenue had amounted to approximately €485 million (in stores) and approximately €10 million (online) in 2019. Thanks to advances already made in digitalising the entire value chain, streamlining structures and processes, and further efficiency-enhancing measures, earnings before interest, taxes, depreciation and amortisation (EBITDA) is projected to be back to pre-crisis level of at least €70 million by 2023, although the online business is not quite expected to reach the profit threshold just yet. This projected revenue and earnings growth, and the fact that there is substantial potential as far as working capital is concerned, give cause for optimism that ADLER will once again generate sustainable positive free cash flow in the years to come. Because of this - and thanks to the Company's consistently conservative financing strategy and the funding commitments of €69 million secured in May - ADLER is very well equipped with financial resources to fund its upcoming investments.
"New ADLER will propel us into a new era," said Adler Modemärkte AG's CEO, Thomas Freude. "We are revitalising our Company, not only by introducing a unique data-driven customer focus and new business ideas in our physical stores, but also online through the implementation of a massive expansion programme. This will enable us to emerge from the crisis even stronger than before, to raise our revenue to €560 million and significantly boost both our profitability and our free cash flow."
Online revenue projected to multiply to €60 million
ADLER will continue to push forward with its store optimisation programme, with the focus increasingly shifting towards expansion. While in the past two years, the focus was mainly on closing down and optimising 19 unprofitable stores so far, ADLER aims to open up to 15 new stores by 2023. Nevertheless, loss-making stores could still be closed during this period. The retreat of certain notable competitors in retail has worked to ADLER's benefit as it opens new stores and has increased flexibility afforded under its new store openings strategy. This also sees smaller stores opening for business, for instance the recently opened shop in Frankfurt am Main's Hessen Center mall. In addition to opportunities in so-called "white spots" in Germany, ADLER also sees lucrative opportunities in neighbouring countries where it already operates, particularly in Switzerland. Overall, the Company aims to generate additional sales of more than €10 million by 2023 through expanding its store network.
Increased profitability through digitalisation and streamlined processes
The coronavirus crisis has laid bare the need to adopt highly efficient structures. In response, ADLER has established a more streamlined, more productive and more modern central organisation which reduces hierarchies and facilitates mobile working. This also includes an adjustment to personnel expenses at HQ by approximately €3 million, which in conjunction with other measures is intended to decrease the personnel expenses ratio by 200 basis points by the end of 2023.
Financial stability and focus on cash flow management of paramount priority
To ensure that ADLER continues to generate sustainable free cash flow in the future to finance its planned growth, the "New ADLER" programme will also initiate measures to improve working capital. Those measures will include efficiency gains in all operating areas of the Company, from merchandising, in pricing and pinpointing customer needs. Here, too, ADLER will leverage its unique AI and CRM data expertise, for instance to efficiently manage flows of goods. By significantly reducing the number of suppliers and working more closely with partners along the value chain, ADLER aims to also achieve a significantly better risk distribution. The objective of this programme is to realise free cash flow growth as well as to increase the ratio of revenue to inventory by approximately 20 percentage points. Furthermore, the measures are also intended to help increase sales performance, process quality and productivity.
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07.10.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
Adler Modemärkte AG
Industriestraße Ost 1-7
+49 (0) 6021 633 0
+49 (0) 6021 633 1299
Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange
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