Orchestra posts €33 million annual loss, appoints new CFO
Children and maternity apparel specialist Orchestra has reported a net loss of €33.6 million for the fiscal year closed at the end of February. The group appointed a new CFO as it seeks to rebalance its books by 2020. Orchestra's financial situation deteriorated in the fiscal year's first six months, a rise in operating costs plunging the group in the red by €7.7 million, while in the 2015-16 fiscal year it posted a €17.7 million profit. Despite an 8.7% rise in revenue, up to €608.3 million, the group's gross profit margin lost 2.8 points, falling to 49.9% (€303.4 million), due to a "negative euro/dollar exchange rate impact" and to a "delay" as the cost-saving effects resulting from the acquisitions made by the group kicked in, Orchestra noted in a press release. EBITDA fell by 26%, to €37.4 million, and was equivalent to 6.2% of sales, compared to 9% last year. The decrease is explained by the rise in retail area, which in one year grew from 260,000 to 293,000 m2, resulting in a "significant increase" in running costs. The results were also negatively affected by the "sizeable provisions" made for the renovation of the headquarters of Orchestra's Belgian subsidiary Prémaman, by store closures in Saudi Arabia and by "litigation with suppliers." In addition, there were "non-recurring costs", especially those for the acquisition of US group Destination Maternity, and for "the reorganisation of the childcare products business", whose sales grew strongly year-on-year. Orchestra defined the last fiscal year as "pivotal" and set itself the priority of "improving profitability in order to get back on a positive performance track," with a target EBITDA of 9% of sales "by 2020." The challenge will be taken on by a new CFO, since last Thursday the group's board of directors dismissed Jacques Blanchet "with immediate effect", doing the same with the Director of the childcare products business, Stéphane Mangin. Jacques Blanchet was replaced by Stefan Janiszewski, financial controller at Royal Canin, a subsidiary of US agri-food giant Mars, and formerly the CFO of French spirits group Pernod Ricard. Last December, Orchestra appointed a new General Manager, choosing the group's former COO Thomas Hamelle.