Desigual doubles profits while continuing to shrink: loses the €600 million threshold

“Desigual has really liked to grow, now we have other things to do.” It was already announced in February by Thomas Meyer, president and founder of Desigual : the Spanish group corrects the evolution of its profit, but continues to shrink. Desigual ended the fiscal year 2019 reducing its size below 600 million euros, while managing to take advantage of the restructuring of the last few years and doubling its net profit. 

The company finalized in 2019 the fifth year of its transformation plan, which continues. The company, one of the phenomena of Spanish fashion during the last decade, has been undergoing a complex restructuring since 2014 to try to regain relevance among consumers and adapt its structure to the new market situation. 

The company, led by Alberto Ojinaga, ended 2019 with a net result of 7.5 million euros, more than double the 3.4 million euros the previous year. Despite the rebound, this figure is below the level of a decade ago’, in 2009, and even more than the record for 2014, when it earned 134.8 million euros. 

Desigual attributes the improvement in the evolution of the net result to the “restructuring of the operations in Western Europe”, while ensuring that “it reflects the positive impact of the strategic changes adopted during the last year, with more forceful decisions and more objective ambitious.” 

The company’s gross operating profit (Ebitda) stood at 55.9 million euros, down 12% from 63.5 million euros in 2018. Desigual recorded an upward trend in its Ebitda until 2014, when it reached the maximum of 261.5 million euros. 

“The company has managed to improve profitability thanks to advances in the restructuring of the distribution network, prioritizing the most profitable businesses (digital channels and territories outside Western Europe), while adjusting its presence in the retail channel European”, has indicated the company. 

Decline in sales  

The group’s sales, on the other hand, continue to drop, a situation derived from the company’s new strategy, which involves restructuring its network of stores and reducing its commercial presence, and the drop in the number of customers. 

In 2019, the group’s revenue was below 600 million euros, registering a drop of 10% to 589 million euros. Desigual has chained five years of sales decline, since in 2014 they reached close to one billion euros and reached a maximum of 964 million euros. 

“During 2019 we accelerated the reorganization of the business, while establishing the foundations for the repositioning of Desigual with a new brand image and a design of collections focused on reaching a younger audience,” says Alberto Ojinaga. 

“This 2020, the reorganization of the business will continue to focus our efforts on growing in the digital channel and in geographies outside Western Europe,” added the executive. “The company’s objective is that in 2023, 60% of sales will occur in the digital channel and in Asia, America and Eastern Europe, a figure that already represents 36% of revenue,” the group points out. The revenue in these geographies already represents 21.3% of Desigual’s sales.