Costs keep accumulating at Belgian lingerie group Van de Velde, but the company will just have to see it through, says to CEO Marleen Vaesen. She is adamant digitisation is necessary and will prove fruitful.
Gross profit down by 33 %
The company's gross profit plummeted by 33 %, after already experiencing a 14 % drop the year before. Large expenses are the main cause, especially when it comes to digitisation. Although turnover dropped by 1.8% last year to 205.2 million euros, analysts see small signs of improvement at the company behind the Marie-Jo and Prima Donna brands, especially in the second half of the year.
Marleen Vaesen, former Greenyard Foods CEO and now at the helm at Van de Velde, thinks is going through hard times, but in time the investments will pay off. "We have invested to take a step ahead in digitisation and lay the groundwork for future growth," she said. There is a lot of catching up to do, which is why the company is heavily investing in online marketing, an improved IT infrastructure and a new e-commerce platform. Vaesen's predecessor relied on a large amount of expensive consultants, which led to an increase of 16 % in staff expenses. That was unacceptable to owner Herman Van De Velde, which cost the man his job.
Costs will nevertheless remain "at a high level", admits Vaesen, since several projects are still ongoing. However, the new CEO is already cutting future costs by terminating the home parties that were recently launched in Germany. The termination costs are recorded as last year's expenses, as are some write-offs on suppliers in which the group has taken an interest. For example, Van de Velde bought an interest in Noyon, an important French lace supplier, which turned out to be loss-making.
But there is also some good news: Van de Velde managed to strike a deal with the tax authorities and now only has to pay 3.6 million euros in taxes, about 10 million euros less than in 2017. The lingerie company now can use a tax arrangement that applies a favourable rate for revenue that comes as a result of innovation. For Van de Velde, it helped to make net profits end at 25.5 million euros. The arrangement stands for five years and has allowed Van de Velde to patent the 3D scanners that are used in the company's Lincherie stores.