Tom Tailor lowers profit forecast and pushes for verticalization

Difficulties with the implementation of the new logistics warehouse, as well as extremely poor market conditions have prompted the German clothing chain to lower its profit forecast for the current fiscal year 2015. 

The management board expects recurring earnings before interest, taxes, depreciation and amortization (EBITDA) in the amount of 75 million to 80 million euros, below the original expectations of the recurring EBITDA margin at 2014, said the company in a press release on Monday. 

Net sales are expected to range between 945 million and 955 million euros, making an 8.5% margin at best. The group had expected to see a margin of 9.4% in EBIDTA according to its initial forecast.

The company’s shares, listed in Germany’s SDAX, slumped on Monday during pre-market trading, continuing the losing streak from the past weeks. The shares decreased 55% from their peak price in March, and fell to their lowest level since the retailer went public in 2010.

“We know the textile market is difficult. However, we are confident we will sustain our long-lasting market position and gain additional market share. This will be driven by our strategy to accelerate the verticalization and strengthen our online presence. Additionally, we will optimize and further streamline our cost structure,” said the CEO.