Le Tanneur & Cie turnover takes deep dip

By

Jean-Paul Leroy

Published
Jul 29, 2013

Le Tanneur & Cie has published its turnover figures for the second quarter of its current fiscal year, posting a sharp decline of 16.5% to 12.3 million euros, For the first half-year overall, the drop was 8% to 28.7 million euros.

The downturn was especially strong in manufacturing for luxury houses, the company's historic operations in which it manages production for other brands. This business plummeted in the second quarter by 24.5% to 7 million euros. For the first half-year, the drop was 15.7% to 16.2 million euros.

Despite such results, the group's own brands kept the fall off in business for the second quarter at 1.3% to 5.2 million euros. Le Tanneur is by far the group's most important label, but Soco and Air France by Le Tanneur are also strong contributors. For the whole half-year, turnover for the group's own brands grew by 4.3% to 12.5 million euros (+3.1% on a like-for-like basis).

Despite bad weather in Europe and the overall economic situation, Le Tanneur stores recorded an uptick of 2.1% over the quarter (+0.7% at constant scope) to reach 3.1 million euros, and 4.6% for the first half-year (+2.1%) to 6.6 million euros.

Wholesale sales of own brands fell 5.9% in the second quarter to 2.1 million euros. However, these did grow 11.4% compared to the first quarter because deliveries were completed earlier compared to 2012. Cumulatively, business for the first half-year was up 4.1% to 5.9 million euros, with a 10.9% increase in sales to French multibrand retailers, stressed the group in its report.

Le Tanneur management views these results as a validation of the strategy initiated in early 2012, based on a solid media plan, a lower markdown rate and a progressive upmarket shift in products. "For the equivalent sales channel, the gross and net margin are improving," the company statement said.

Of course, the leather goods group will be very careful on the development of its manufacturing division for luxury houses, especially since that activity still accounts for a large majority of its business. Le Tanneur explained that the slowdown was due to a "significant change in the production mix of a client, which necessitated an adjustment phase affecting productivity and turnover." But the leather goods company still intends to strengthen and develop this sector by prospecting for new clients.

Regarding its own brands, the group intends to develop products under the label Made in France at the workshops of its Belley, France site. It is also proposing selective distribution contracts to multibrand customers aimed at a higher profile for Le Tanneur products in such stores. The company also mentioned a concept makeover for their store in the La Défense neighborhood of Paris.

Previously, Le Tanneur had created a sister company, Le Tanneur International, based in Doha, Qatar. After the transfer of the Belgian shops and the Japanese subsidiary to this new company in 2012, there are now plans to give it control over the two German stores and the Chinese subsidiary. Also on the planning board is a continuation of Le Tanneur store openings on an international scale through the Qatar-based company.

In France itself, Le Tanneur & Cie intends to increase the profitability of its own brands, specifically through the "rationalization of the French store network."