New turnaround plan for Gerry Weber sees increased digital focus

Another day, another turnaround plan. German fashion specialist Gerry Weber has just unveiled a new turnaround strategy, called Performance Programme, that moves it on from its two-year-old Fit4Growth strategy.


Gerry Weber


The new plan is designed to rebuild its business model from scratch and deliver sustainable profits growth, so we certainly can't accuse it of not being ambitious. But is it really that is different from the previous strategy?

The company, whose signature brand is also popular in the UK middle market, says yes. Its new plan will see it focusing on its core competencies, streamlining its structures and ensuring that the flow of merchandise is effectively matched to what's in demand out there in the real world of retail.

There will also be a much bigger focus on digital across the business, a “comprehensive omnichannel strategy to integrate all distribution channels” and its structures becoming “leaner”. And as expected when the word “lean” is used, that will mean a number of job losses. Between 140 and 150 full-time posts will go at its HQ and in its logistics operations in the next two years.

The company also expects one-off charges of around €15 million in the current financial year and an impact on revenues in the next year. The Gerry Weber Retail statement will also see slightly lower revenues this year.

But the long-term view is that sales revenues will grow significantly faster than the market as a whole from year three to year five. Cost savings will add up to many millions of euros and could add around €35 million-€40 million to its operating profits within the next three to five years.

So as we can see, the company is fully justified in talking about rebuilding the business from scratch and CEO Ralf Weber described the programme as a “revolution” for the firm.
 
"We will change the way we think and work from scratch for even greater vertical integration and full concentration on the consumer. We will become faster, more modern and more flexible at the same time,” he said.

And he admitted that it's something that the business needs to do rather than simply wants to do. “The results for the first half of 2017/18 have shown that we must take fundamental and effective counter-measures in spite of the positive effects of the completed Fit4Growth programme,” he added.

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