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Sales of Desigual fall by 11.5% for their wear on the European market

The group's benefit falls 33.3% for investments in the company's transformation plan

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Sales of Desigual fall by 11.5% for their wear on the European market

For third consecutive year, Desigual suffered a decline in sales. The turnover of fashion group descended last year 11.5%, up to 761 million euros, as reported by company in a statement. The profit of company, immersed in a transformation plan that must culminate in 2020, also fell 33.3%, until 47 million. The company expects, however, that in second half of 2018 re will be turning point that seeks strategy that a new leadership has launched in 2016 and that has supposed closure of 64 stores in two years.

Desigual's corporate director, Alberto Ojinaga, admits that 2017 was " hardest year" in transformation plan that launched company. The results account of group, controlled by Thomas Meyer and participated by French investment fund Eurazeo, was mainly due to fall in sales and costs derived from plan. Sales saw deterioration of brand's decline in European Union's markets, which account for 90% of turnover, and decline of business of Multibrand stores. According to company, EBITDA decreased by 2017 by 28%, to 119 million, and result was 33.3%. "We are in equator of a transformation that we started in 2015 and we are going in right direction," says Ojinaga.

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After a process of unbridled openings (one came to open a day in 2014), Desigual has put order in its expansion and in last two years has closed 64 stores and has opened only 11. That has allowed box to increase to 452 million euros. "The company's second best year in liquidity," says Ojinaga. For this reason, company has proposed to accelerate its transformation plan. "This will be a critical year," he adds. In first semester firm will still continue with dynamics of closures of chain stores (now has 509) that still do not contribute enough sales. In past, Desigual opened stores irrationally, often too close to each or. This not only did not bring a large increase in sales, but re was a cannibalization effect.

New openings from July

Once order has been placed in stores, in second semester firm will reopen stores. In particular, firm envisages 50 new establishments, but in areas of growth. These are mostly in Latin America, where sales did grow 18%. "We plan an aggressive openings plan in three years in Mexico and continue to grow in Colombia, Chile or Peru," says David Meire, Customer Manager of Desigual. The area where eye is unequal is Asia, especially Japan. The or two big bets of company are digital field, in which sales grew 14% in 2017, and reform of "fleet of stores", Meire explains.

In addition to distribution, company's plan will also accelerate in four or areas: strategy towards consumer, product and brand. As for client, Desigual wants to put it back in center of his decisions, not only in terms of garments, but also with plans of loyalty and recovering acts in which y participated years ago and that distinguished brand. With regard to product, Desigual will continue with its two annual collections, but it shall ensure that stores receive news on a monthly basis, in words of Meire, to bring "freshness" to establishments. In addition, he adds, to traditional product of Desigual, will begin to launch anor "more campaign", in line with moment but with distinctive signs of desigual to attract new customers. As for brand, company has already started to relaunch it more aggressively, but it will continue to do so all this year.

The acceleration of plan and improvement envisaged for second semester does not mean, warns Ojinaga, that company returns to a sales increase in 2018. This will depend on wher this change in trend compensates for drop-off planned for first tranche of year. "We continue to bet on long term and refore we invest strongly in quality of product and repositioning brand," he concludes.


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