Tendam posts positive EBITDA and EBT in Q2 2020/21

The company generated €74.6 million in free cash flow, improving its liquidity position over August 2019.

Tendam’s flexibility and operational capacity allowed it to drive down stock levels by €30.7 million or 18.4% year-on-year.

Online sales rose 40.5% between June and August and 45.3% during the first half of the year, totalling 15.3% of total sales in Spain in the second quarter.

The drop in revenues continued to slow to -23.6%, buoyed by the gradual opening of its brick-and-mortar stores (with 97% of stores open in August, up from 59% in May) and by strong growth in its digital business and a higher conversion rates in physical stores.

The company’s strong performance confirms the effectiveness of its omni-channel model, validating the pre-emptive steps taken at the beginning of the crisis to protect liquidity as well as the operational flexibility to reduce stock levels and increase cash generation.

Tendam Brands, the parent company of the Group, one of Europe’s leading omni-channel groups in the specialist fashion sector, today announced its results for the period 1 June to 31 August 2020. The company posted a return to profit in the second quarter of its fiscal year 2020/21, reaching pre-IFRS16 adjusted EBITDA of €31 million and EBT (earnings before taxes) of €8.7 million.

Tendam Chairman and CEO Jaume Miquel said: “We are particularly pleased with the company’s performance from June through August. It marks a turning point, as the initiatives we put in place back in March to contend with the COVID-19 crisis have come to fruition and are reflected in our key financial indicators. The return to positive EBITDA and EBT, strong cash generation and a significant reduction in stock is the outcome – although the exceptional market situation persists – of Tendam’s strong operating model and ecosystem, in which the customer, the digital business, and our flexible, capillar network of physical stores are all inter-connected”.

The significant generation of free cash flow in the second quarter (up by €74.6 million, representing a year-on-year decrease of only €1.7 million) allowed Tendam to fully repay its revolving credit facility. The group has therefore considerably reduced its gross debt, while cutting its net debt from €597.6 million in May 2020 to €524 million in August. It has also increased its liquidity position to €320.1 million (compared to €251.1 million in May 2020 and €287.3 million in August 2019).

Tendam’s total revenues outperformed the company’s forecasts between June and August 2020, standing at €260.3 million (-23.6%), buoyed by the gradual reopening of brick-and-mortar stores (59% at the end of May to 96% in June and 97% in August) and by the robust growth in online sales and an increased conversion rate, i.e. more purchases with lower footfall in stores.

Online sales performed well over the quarter, increasing by 40.5% (versus +45.3% for H1) and representing 15.3% of the Group’s total Q2 sales in Spain, a figure the company hopes to maintain or even continue growing through the end of the year. The strong profitability of Tendam’s digital channel resulted in an increase in gross margin of 3.5 percentage points reaching 57.6%, compared to 54.1% in the second quarter of last year.

Tendam’s flexibility and operational capacity allowed it to drive down stock levels by €30.7 million, or 18.4%, versus Q2 last year.

In Q2 2020/21, Tendam attracted an additional half million loyalty club members to its programmes, taking the total to 26.6 million (a 7.7% y-o-y increase).

In sustainability and social responsibility, the Group has focused its efforts on supporting its supply chain (notably by joining the “Covid-19 Call to Action in the Garment Industry”), increasing its brands’ sustainable collections (at Springfield, for example, sustainable lines already account for 20% of the total), and by collaborating with independent brands such as Hemper and Slow Love.

Tendam recently announced that it is including leading brands on its e-commerce platform, building on its digital multi-brand store strategy. Currently, Tendam’s online range features household brands including Levi Strauss & Co. and Bestseller A/S groups, as well as other independent brands. These newly-integrated brands and any others that join Tendam’s e-commerce platforms in the future will be able to take advantage of the Group’s loyalty clubs and omni-channel network.

The company will also launch its first collection of the Hoss Intropia brand, acquired in 2019, in the upcoming spring-summer season.

Tendam’s new multibrand strategy is a clear reflection of the company’s experience in segmentation and knowledge of its customer base. It also represents significant progress in the Group’s omni-channel positioning, strengthening the appeal of its digital stores and solidifying greater economies of scale in the already highly profitable online operation.

Jaume Miquel, President and CEO of Tendam, concluded: “We are very happy with the performance of our online sales in the first half and we have seen even stronger growth in the first months of the third quarter, sustaining higher levels of profitability. This is yet another indicator of the strength of our digital ecosystem, bolstered by our loyalty club programmes and our capillar, seamless omni-channel network of stores. This is a solid step towards our goal of tripling digital sales by 2023.”