Ecco's profits fall after the pandemic: financial review

 3 minutes

Ecco's profit in 2022 was lower than before the pandemic. Despite a 30% increase in sales of Ecco shoes this year, the company is not satisfied with the results. Worldfootwear says earnings are "well below pre-pandemic levels." At the same time, Ecco's net revenue was 1.59 billion euros by 31 December 2022, up 30% year-on-year.

Taking a closer look at the results, it can be seen that the company's wholesale division increased its net revenue by 4.5% to 601.5 million euros, while retail sales (including online sales) increased by 63.5% to 880.4 million euros. It is important to note that sales growth was 64.4% in Europe, the Middle East and Africa, reaching 694.3 million euros. In North America, net sales rose 180% to €248.6 million. The company also saw growth in Greater China, where net revenue was €392.7 million, up 9%, and in Asia Pacific, where it was €141 million, up 30.7% year-on-year.

The majority of Ecco's sales come from the footwear segment, which posted a net revenue growth of 1.42 billion euros in 2022, up 32.7%. Accessories sales also rose by 80.1% to 57.5 million euros compared to the previous year. However, Ecco's leather business saw a 0.6% decline in sales, with net sales of €103.8 million in this area.

Despite the growth in sales, Ecco considers the results of 2022 unsatisfactory. The annual profit was "significantly below the results before the covid period, 2017-2019". In 2022, Ecco posted a profit of €48.6 million, which is significantly higher than the previous year, but still far from the results of 2019 and 2018, which were €147.6 million and €148.9 million, respectively.

The company attributed these results to the negative impact of rising freight rates and the COVID-19 pandemic, especially in Asia. Persistent disruptions to the global supply chain throughout 2022 impacted production and led to instability in the supply of finished products to customers. In order to ensure timely deliveries in 2023, the company decided to increase inventory and production. However, this was reflected in the company's net working capital and operating cash flow.

In general, despite the challenges faced by Ecco in 2022, the company continues to develop and strive to improve results. Footwear remains an important segment and sales continue to grow in different regions. Ecco aims to overcome current difficulties and establish more stable results in the future.

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