Beter Bed realises lower profit due to lower revenue in first half of 2013

* Revenue falls by 8.3% to EUR 180.1 million (H1 2012: EUR 196.3 million). * Revenue in Germany and the Netherlands decreases by 2.6% and 14.6% respectively. * Gross profit as percentage of revenue increases from 55.8% to 56.4%. * Expenses decrease by 3.3% to EUR 93.5 million (H1 2012: EUR 96.6 million). * Excluding non-recurring expenses of EUR 1 million for Spain, expenses fall by 4.3%. * Operating profit of EUR 8.1 million (H1 2012: EUR 12.9 million)...

• Revenue falls by 8.3% to EUR 180.1 million (H1 2012: EUR 196.3 million).
• Revenue in Germany and the Netherlands decreases by 2.6% and 14.6% respectively.
• Gross profit as percentage of revenue increases from 55.8% to 56.4%.
• Expenses decrease by 3.3% to EUR 93.5 million (H1 2012: EUR 96.6 million).
• Excluding non-recurring expenses of EUR 1 million for Spain, expenses fall by 4.3%.
• Operating profit of EUR 8.1 million (H1 2012: EUR 12.9 million).
• Net profit of EUR 5.4 million (H1 2012: EUR 9.1 million).

 

Beter Bed Holding N.V. realised net profit of EUR 5.4 million in the first half of 2013. This represents a 40.5% decrease compared to the same period of last year (H1 2012: EUR 9.1 million), and this is in line with the outlook stated at the time of the announcement of the first quarter results and the trading update for the second quarter. Excluding the non-recurring expenses for Spain and the reorganisation of the Benelux head office (total EUR 1.2 million) announced in the first quarter, net profit amounted to EUR 6.6 million (a decrease of 27.9%).

 

 

Key figures interim results

(in millions of EUR unless stated otherwise)	2013 H1	2012 H1	Change
Revenue	180.1	196.3	(8.3%)
Gross profit (%)	56.4	55.8
EBIT	8.1	12.9	(37.6%)
EBIT excl. non-recurring expenses	9.3	12.9	(28.3%)
Net profit	5.4	9.1	(40.5%)
Net profit excl. non-recurring expenses	6.6	9.1	(27.9%)
Earnings per share (in EUR)	0.25	0.42	(40.5%)
Operating cash flow	11.9	10.3	15.1%
	30-6-2013	30-6-2012
Solvency (%)	57.6	50.6

 

Ton Anbeek, Chief Executive Officer:

'The continuing low consumer confidence placed revenue under strong pressure in the first half of 2013. The propensity to buy in the Netherlands, Spain and Belgium remains low due to uncertainty regarding disposable incomes. Germany saw the weather influences play a particularly negative role. Switzerland and Austria showed positive revenue performance. The fall in revenue could be compensated partially by the continuing focus on improving margins and controlling expenses. Our financial position remains unabatedly strong despite the lower profit in the first half of 2013. This enables us to be able to continue to withstand the difficult market conditions and to further improve our market position.'

 

Key figures second quarter results

(in millions of EUR unless stated otherwise)	2013 Q2	2012 Q2	Change
Revenue	81.5	87.8	(7.1%)
Gross profit (%)	56.4	55.8
EBIT	0.1	0.6	(88.8%)
EBIT excl. non-recurring expenses	1.1	0.6	86.3%
Net profit	(0.2)	0.2	(197.1%)
Net profit excl. non-recurring expenses	0.8	0.2	279.0%

 

Second quarter 2013

Revenue at comparable stores in Germany decreased by 5.3% in the second quarter, while there was a drop of 15.5% in the Netherlands. Revenue at comparable stores for the entire group fell by 9.0% in the second quarter.

 

Total revenue decreased by 7.1% to EUR 81.5 million in the second quarter (second quarter 2012:

EUR 87.8 million). Gross profit totalling 56.4% was higher in the second quarter of 2013 than in the second quarter of 2012, partially due to improved purchasing conditions. Even though sixteen stores were opened, the average number of stores remained virtually the same in the second quarter compared to the second quarter of last year owing to the large number of store closures in Spain.

 

Total expenses fell by 5.1% in the second quarter from EUR 48.4 million to EUR 45.9 million. These expenses also include the non-recurring reorganisation expenses in Spain that total EUR 1 million. Excluding these non-recurring expenses, total expenses fell by 7.2%. The cost-savings are the result of the cost-cutting program launched in late 2012 with the objective of lowering both the store and overhead expenses in primarily the Netherlands and Spain and to a lesser degree Germany. Expenses as percentage of revenue increased in the second quarter from 55.2% in 2012 to 56.3% in 2013. In the second quarter average expenses (excl. DBC) per store decreased by 4.9%. Operating profit (EBIT) decreased in the second quarter by EUR 0.5 million to EUR 0.1 million (second quarter 2012: EUR 0.6 million). Net profit in the second quarter of 2013 amounted to EUR 0.2 million negative (second quarter 2012: EUR 0.2 million).

 

Revenue and net profit are generally lower in the second and third quarter than in the first and fourth quarter due to the seasonal pattern in consumer demand.

 

First half of 2013

Revenue in the first half of 2013 decreased by 8.3% to EUR 180.1 million (first half of 2012: EUR 196.3 million). Revenue at comparable stores fell by 9.9% in the first half of 2013.

 

Revenue performance per country in the first half of 2013 was as follows:

Netherlands	-14.6%
Germany	-2.6%
Austria	7.6%
Switzerland	3.0%
Spain	-46.9%
Belgium	-27.5%

 

Considerably lower visitor numbers in Spain due to the economic crisis resulted in a strong drop in revenue at comparable stores (-42.7%) in the first half of 2013 at El Gigante del Colchón. This led to the implementation of far-reaching, cost-saving measures and the closure of poorly performing stores. As of 30 June 2013 the chain still has 45 stores. Another 15 stores will be closed in the third quarter of 2013. The aim is to ultimately retain a core of 30 stores, which are expected to be able to achieve at least a break-even result on an annualised basis.

 

Gross profit as a percentage of revenue amounted to 56.4% in the first half of 2013 and is consequently higher than in the same period of last year (H1 2012: 55.8%). Gross profit rose due to factors including improved purchasing conditions.

 

The average number of stores grew by 1.1% in the first half of 2013 compared to the first half of 2012. Despite this growth, the company was able to reduce total expenses in the first half of 2013 by 3.3% from EUR 96.6 million to EUR 93.5 million. Non-recurring reorganisation expenses in Spain and the Netherlands of EUR 1.2 million are included in these expenses. Excluding these non-recurring expenses, expenses decreased by 4.5%. The cost-savings are the result of the cost-cutting program launched in late 2012 with the objective of lowering both the store and overhead expenses in primarily the Netherlands and Spain and to a lesser degree Germany, supplemented with further cost-saving activities in 2013. Operating expenses as a percentage of revenue increased in the first half of 2013 from 49.2% in 2012 to 51.9% in 2013.

 

Average expenses (excl. DBC) per store decreased by 3.7% in the first half of 2013 as a result of the cost-cutting program launched in late 2012. This effect is strengthened by the slight growth in the average number of stores.

 

Operating profit (EBIT) decreased in this period by 37.6% from EUR 12.9 million to EUR 8.1 million. As a percentage of revenue, operating profit (EBIT) decreased by 6.6% to 4.5%.

 

The tax burden in the first half of 2013 rose from 28.1% to 29.6%. This is caused primarily by the larger share of the revenue that is realised in Germany that has (on average) a higher tax rate.

 

Net profit in the first half of 2013 decreased by 40.5% from EUR 9.1 million to EUR 5.4 million. Earnings per share in the first half of 2013 amounted to EUR 0.25 (first half of 2012: EUR 0.42).

 

Investments and cash flow

Investments in the first half of 2013 totalled EUR 2.6 million (first half of 2012: EUR 5.7 million). Investments in stores amounted to EUR 2 million in the first half of 2013 (first half of 2012: EUR 4.3 million). The remaining amount has been invested primarily in IT and other operating assets. The operating cash flow rose by 15.1% from EUR 10.3 million in 2012 to EUR 11.9 million in 2013.

 

Financing

Solvency amounted to 57.6% on 30 June 2013. It stood at 50.6% on 30 June 2012 and 50.4% at year-end 2012. Net debt improved by EUR 5.8 million compared to year-end 2012.

 

Operational

A total of 37 stores were opened and 55 stores were closed in the first half of 2013. This brings the decline in the number of stores in the first half of 2013 to 18 on balance. The decrease in the number of stores was caused primarily by the large number of closures in Spain and to a lesser extent in the Netherlands. Most of the store openings in the first half year were in Germany, with a net total of 11. There were a total of 1,201 stores at the end of June 2013.

  

Number of stores	31-12-2012	Closed	Opened	30-6-2013
Matratzen Concord	1,004	35	36	1,005
Beter Bed	88	-	1	89
El Gigante del Colchón	63	18	-	45
BeddenREUS	44	2	-	42
Slaapgenoten	16	-	-	16
Schlafberater.com	4	-	-	4
Total	1,219	55	37	1,201

Matratzen Concord

Number of stores	31-12-2012	Closed	Opened	30-6-2013
Germany	852	20	31	863
Netherlands	27	4	-	23
Austria	67	7	-	60
Switzerland	52	4	4	52
Belgium	6	-	1	7
Total	1,004	35	36	1,005

Matratzen Concord

Cash & carry formula Matratzen Concord realised revenue of EUR 115.7 million (64.3% of the total group revenue) in the first half of 2013. This is a decrease of 3.0% compared to the comparable period of 2012. 83.4% of this formula's revenue was realised in Germany. Revenue at comparable stores fell by 6.2%.

 

Beter Bed

This formula is active in the Netherlands and has once again been active in Belgium since 2011. The number of Beter Bed stores has increased by one. Revenue in the first half of 2013 fell from

EUR 54.0 million to EUR 47.9 million, representing a decrease of 11.4%. Revenue at comparable stores decreased by 11.3% in the first half of 2013. Beter Bed contributes 26.6% to total group revenue.

 

Other formulas

Revenue of the other formulas amounted to EUR 16.5 million in the first half of 2013 and as a result contributed 9.1% to total group revenue. This includes the revenue of the retail formulas BeddenREUS (Netherlands), Slaapgenoten (Netherlands), El Gigante del Colchón (Spain) and Schlafberater.com (Germany) and the wholesaler DBC. The revenue of the other formulas was consequently 28.4% lower in the first half of 2013 than in the comparable period of last year.

 

Outlook for third quarter 2013

In addition to a continuing low level of consumer confidence in countries including the Netherlands and Spain, the fair summer weather in July and part of August led to lower visitor numbers and order intake in all markets (except Spain). Based on this, a strong decrease in operating profit is expected in the third quarter of 2013. As a consequence additional cost savings will be implemented as of 1 September.

 

Interim dividend

The company intends to pay an interim dividend in 2013. As is customary, further announcements on this matter will be made at the time of the publication of the third quarter figures on 1 November 2013.

 

Profile

Beter Bed Holding N.V. operates in the European bedroom furnishings market. Its activities include retail trade through a total of 1,201 stores at the end of June 2013 that operate via the chains Beter Bed (active in the Netherlands and Belgium), Matratzen Concord (active in Germany, Switzerland, Austria, the Netherlands and Belgium), El Gigante del Colchón (active in Spain), BeddenREUS and Slaapgenoten (both active in the Netherlands) and Schlafberater.com (active in Germany). Beter Bed Holding is also active in the field of developing and wholesaling branded products in the bedroom furnishing sector in the Netherlands, Germany, Belgium, Spain, Austria, Switzerland, Turkey and the United Kingdom via its subsidiary DBC International. Beter Bed Holding N.V. achieved net revenue of EUR 397.3 million in 2012. More than 65% of the group's net revenue is realised outside the Netherlands. The company has been listed on the NYSE Euronext Amsterdam since 1996 and is included in the Amsterdam Small Cap Index.

 

For more information, please contact: Ton Anbeek, Chief Executive Officer
Tel. +31 (0)413 338819 / Fax +31 (0)413 338829 / Mob. +31 (0)6 53662838
E-mail: ton.anbeek@beterbed.nl / Website: www.beterbedholding.com

 

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