Tom Tailor issues profit warning, considers Bonita sale

Troubled fashion retailer Tom Tailor has narrowed its earnings guidance and is reviewing a sale of its Bonita brand. The womenswear brand is to be restructured, stabilised and prepared for any “value-adding options“.

​“This may also entail a sale of Bonita”, the company said on Wednesday in Hamburg as it announced a decline in profits. The retailer had already cut its profit forecast in September.

Tom Tailor Holding SE will focus on implementing extensive measures to drive growth at its core brand, it said in a press release. The Fosun Group, which owns a 28.89% stake in the business and is its largest shareholder, supported the plan alongside other financing partners.

Tom Tailor has been trying to keep its Bonita brand alive for some time now, but its weak performance has forced the company to write down the value of its investment. As a result, the value of the brand has been written down by €120 million to €130 million. Depreciations and higher provisions for impending losses from Bonta stores had a negative impact on the company’s EBITDA and net profit. Furthermore, Bonita’s sluggish performance in the fourth quarter also reduced the operating result.

The company now expects to post a full-year EBITDA margin of 6% to 6.5%, it said. This is the second time Tom Tailor revised its outlook after slashing its margin guidance from 10% to 7.5% to 8.5% in September. The company’s shares fell by 9.5% in after-hours trading. They had grown by 8.5% during regular trading hours.  

In the third quarter, group sales fell by 10.7% to €214.3 million, and the company slipped into the red. Its debt also rose noticeably. Tom Tailor bought the Bonita brand in 2012 to expand its clientele to the over-40s.