DGAP-News

Powerland AG: Powerland reports revenue growth and publishes audited Annual Report for full year 2014 - Seite 2

Luxury % 62% 69%
Casual % 38% 31%
Gross profit 60.8 60.6 -0.4%
EBIT1 12.3 10.7 -13.4%
Net profit 5.4 3.8 -30.3%
Earnings per share in EUR2 0.36 0.25 -30.6%

1 EBIT represents earnings before net finance cost and tax
2 The computation of earnings per share is based on net profit and 15
million shares.

Continued focus on quality of Powerland's distribution network

In 2014, Powerland continued the review of the sales and brand performance
of its existing stores and as a consequence downsized the distribution
network by underperforming stores. In the meantime, some store locations
were adjusted from higher to lower floors to enhance the brand visibility
and boost single-store performance in return. In addition, Powerland has
implemented more stringent criteria for new store openings as the brand
name is getting more recognized and customer appeal has increased. In line
with this strategy, Powerland opened the first store outside mainland China
at Hong Kong airport, as well as its first lifestyle store in Putian and
the first three online stores at jingdong.com, tmall.com and vip.com. In
total, the number of Powerland stores decreased from 214 as at 1 January
2014 to 200 as at 31 December 2014. 36 stores were newly opened in 2014
while 50 stores were closed during the same period. Out of the 200 existing
stores, 163 are distributor-operated stores, 34 self-operated stores and 3
online stores.

Earnings situation

Despite the increased revenue, gross profit of the Company decreased
slightly from EUR 60.8 million (FY 2013) to EUR 60.6 million (FY 2014)
mainly due to the gross profit decrease of 29.1% in the Casual segment. Due
to a more efficient management of distributors and a more efficient
allocation of the marketing budget, full year SG&A expenses decreased from
EUR 33.8 million by 13.2%, to EUR 29.3 million. Meanwhile, Powerland's
administrative and other expenses increased from EUR 15.0 million in 2013
by 40.3%, to EUR 21.0 million in 2014 mainly due to increased provisions
for trade receivables. As a result, full year operating earnings before
interest and taxes (EBIT) decreased from EUR 12.3 million by 13.4%, to EUR
10.7 million and EBIT margin decreased from 7.4% in 2013 to 6.1% in 2014.