Total sales, expressed at a fixed exchange rate, reached €1,155.9 million (€1,150.8 million at the current exchange rate), versus €1,154.7 million in the previous financial year.

Online sales grew by 29.4% to represent 7.9% of total sales in Spain.

Gross margins improved by 0.5% to stand at 61.7%.

EBITDA reached €161.2 million (+0.4% vs. 2017/18), €162.8 million at a fixed exchange rate (+1.4% versus 2017/18).

Cash generation improved considerably by €45.9 million to reach €68.9 million, despite a 47% rise in investment in omni-channel expansion.

The Tendam brands’ loyalty programmes now have 23.9 million members (+8.5% vs. 2017/18).

The company continues to work on its omni-channel strategy which combines both physical stores and online sales.

Tendam Brands, the parent company of the Group, one of Europe’s leading fashion retailers operating in the specialised chain segment through the Cortefiel, Pedro del Hierro, Springfield, Women’secret and Fifty brands, has announced today its results for its 2018/19 financial year, which runs from 01 March 2018 until 28 February 2019, and which is its first full financial year.

During this twelve-month period, Tendam’s sales held steady at €1,155.9 million expressed at a fixed exchange rate (€1,150.8 million at the current rate of exchange), versus €1,154.7 million last year.

In a 2018 marked by adverse weather conditions, especially in the first six months, coupled with geopolitical instability, like-for-like sales were up on a quarter-by-quarter basis, with the best performance registered between September 2018 and January 2019.

During the last financial year, Tendam Brands registered an EBITDA of €161.2 million (+0.4%), or €162.8 million when converted to a fixed exchange rate. Earnings before taxes stood at €80.8 million (versus €21.3 million last year), driven by improved EBITDA and lower financial expenses.

In this regard, Jaume Miquel, Chairman and CEO of Tendam said: “2018 reflects Tendam’s strength and that of its business model against a challenging backdrop of increased volatility and uncertainty. In a year marked by adverse weather conditions and geopolitical instability, on a quarter-by-quarter basis we have improved our like-for-like sales and EBITDA, while earnings before taxes increased almost fourfold”.

The results for the 2018/19 financial year show the positive performance of gross margins, which improved by 0.5% to reach 61.7%. This improvement reflects the strong positioning of the Tendam brands, which are securing higher margins than fast fashion operators. It also shows the robust management of promotional activity and inventory and the company’s highly efficient online sales.

Online sales increased by 29.4% during the period, continuing the upward trend across all Tendam brands. Online sales were up by over 20% across all brands, with particularly strong growth at Women’secret (+34.9%) and Cortefiel and Pedro del Hierro (+32.4%). E-commerce now represents 7.9% (+1.6%) of the company’s total sales in Spain.

“One of the cornerstones of our model is the ability to generate sustainable and attractive Gross Margins, as demonstrated by the year-on-year improvement of 0.5% to reach a gross margin of 61.7%. This is thanks to four factors: excellent stock sourcing, streamlining promotional activity, stock management and the high profitability of our online business.

The quality of our online business sets us apart from the competition, yielding returns that are higher than standalone physical stores. This is due to the fact that the omni-channel strategy capitalises on three aspects: a robust and streamlined store portfolio, highly efficient digital operations and a database of customers that are highly loyal to the Tendam brands” added Jaume Miquel, Tendam Chairman and CEO.

As a result of the above, Tendam’s financial position continued to make positive progress. At the end of the 2018/19 financial year, free cash flow generation after interest improved by €45.9 million versus February 2018. Financial expenses were cut by €46 million thanks to the new debt restructure, while Tendam’s net debt stands at €451.2 million, which represents a leveraging ratio of 2.8x EBITDA (versus 3.0x EBITDA in February 2018). Over the course of the last financial year, Tendam invested €65.88 million to buy back and cancel debt.

Jaume Miquel, Tendam Chairman and CEO, highlights: “The financial position is strong and reflects a clear reduction in leveraging thanks to a combined effect of an improvement in EBITDA, Capex efficiencies, a reduction in financial expenses and the use of free cash flows to redeem debt ahead of maturity”.

Tendam’s omni-channel experience

The omni-channel strategy of Tendam is progressing steadily with tangible solutions that merge the physical store and digital channel. The Group launched the pick-up in store service in Spain over the course of the year, allowing items purchased online from the Cortefiel and Pedro del Hierro brands to be picked up at more than 120 Springfield points of sale. This ensures that almost every region in Spain is catered for with delivery points, in turn expanding the physical reach of Pedro del Hierro and Cortefiel. Over 3,000 orders were processed in the initial two months following the roll-out. Thanks to this initiative, online penetration has seen an increase of between 7 and 9% in several provinces.

Meanwhile, over the course of the year the reserve online and pick up in store service was extensively rolled out across Spain –the company’s home market that serves as a test bed for most initiatives– and began to be implemented in Portugal. The system allows customers to reserve a product online and hold it at their choice of physical store for a maximum period of 48 hours, free of charge and with no obligation to buy. Since the service was launched in October, more than 65,000 product reservations have been made in Spain.

This year, Tendam began to expand its network of directly-operated stores for its four brands, with 65 net new openings that differ according to the market, size and brand on the basis of profitability and efficiency criteria.

As of 28 February 2019, Tendam’s store network comprised 1,993 points of sale, of which 1,242 are directly-operated stores, 632 franchise operations and 119 department store corners.

“The customer’s needs are clear: they want the best of a physical store and the best of a digital service. At Tendam, we seek to respond to this need with a robust and streamlined store portfolio complete with highly-qualified staff and a range of digital services that provide real value to the customer”, said Jaume Miquel, Chairman and CEO of Tendam.

Forging a space for dialogue with the customer

At the end of the 2018/2019 financial year, the Tendam brands’ loyalty programmes reached 23.9 million members, up 8.5% versus February 2018, with a rise of 10.5% and 9.4% in Women’secret and Springfield, respectively, and almost 6% in Pedro del Hierro and Cortefiel.

The company continues developing initiatives to gain a better understanding of customers to meet their needs at all times. Data management and analytical capacity, innovation when applying business intelligence models to day-to-day operations, as well as CRM projects constitute the key components that the company is driving forward through various initiatives, including the multi-club, multi-channel and the use of artificial intelligence in customisation. These are all geared towards creating a space for dialogue and interaction with the customer, something that is continuously at the core of innovation at Tendam.

Tendam Chairman and CEO, Jaume Miquel, said: “We aim to be the benchmark data-driven retailer, offering a seamless transaction process and enhanced consumer engagement by drawing on our Loyalty Programmes, analytical capabilities and the benefits of our robust and streamlined store portfolio with an advanced digital strategy.”

Sustainability embedded in the value proposition

Sustainability at Tendam is not an add-on, but an inherent part of our value proposition. From a product perspective, the brands have launched full collections made from organic and sustainable fabrics, as well as recycled polyester and Tencel® fibres. Last year –for the second year running–, Springfield, for example, launched its Reconsider collection and Women’secret prepared the launch of the Honest collection, an initiative that will be replicated across all brands. In terms of processes, Tendam plays an active role in Amfori’s BSCI and BEPI programs for social and environmental audits, respectively.

Sustainability is a fundamental aspect that is involved at the earliest design phase. In this regard, the Group is collaborating with the Universidad Politécnica de Madrid on their sustainable fashion design program via the Aula de Diseño Sostenible.

Recent corporate milestones

Credit rating agency S&P Global increased its rating of Tendam Brands to B+ with stable outlook on 22 May 2019. S&P Global awarded the rating based on Tendam’s proven progress of its like-for-like operating performance in the last financial year, generating solid free operating cash flows (FOCF) and buying back a substantial amount of its debt.

On 3 June 2019, the Board of Directors of Tendam Brands appointed Jaume Miquel as Executive Chairman of the company, a position that will be merged with his CEO duties.