Jan. 11 (Bloomberg) -- Douglas Holding AG, Europe’s largest retailer of makeup and perfume, dropped the most in 10 1/2 years in Frankfurt trading after saying its Thalia book unit’s need to shift business online will hurt earnings in 2012.
Douglas fell 9.8 percent to 25.39 euros at the close in Frankfurt, the steepest decline since June 2001. Earnings before interest, taxes, depreciation and amortization in the year through September 2012 will drop to as little as 200 million euros ($254 million) from 292.9 million euros last fiscal year, Hagen, Germany-based Douglas said in its annual report today.
At Thalia, “we must find the optimum way of integrating our traditional stores with our online shops so that we can leverage the potential of the new megatrend, the e-book,” Chief Executive Officer Henning Kreke said at a news conference in Dusseldorf, Germany.
Group profit rose in the 12 months ended September 2011, with only Thalia and the confectionery unit posting declines in Ebitda. Kreke said that Douglas, which gets most of its earnings from perfume and cosmetics, is in a “very good position to benefit” as long as predictions of low unemployment and rising wages in Germany offset effects of the sovereign-debt crisis elsewhere in Europe.
Investors Want Information
The company’s forecast is a “major disappointment” and Douglas needs to tell investors the amount of restructuring costs at Thalia, Holger Schwesig, an analyst at DZ Bank AG in Frankfurt, wrote in a report today.
“At tomorrow’s analyst conference, the company has to specify these restructuring costs and in general has to provide solutions and measures to get rid of the structural problems at Thalia,” he said.
A shift to electronic books prompted Barnes & Noble Inc., the largest U.S. bookstore chain, to say earlier this month that it may spin off its Nook e-reader business. Kreke said today that Thalia needs to respond to the “extremely rapid development” of Amazon.com Inc., the world’s biggest online retailer, with “operational excellence” at its bookstores as well as over the Internet.
Net income attributable to shareholders in fiscal 2011 rose 14 percent to 86.7 million euros from 75.9 million euros, Douglas said. That compared with the 86 million-euro average of nine analyst estimates compiled by Bloomberg. Sales rose to 3.38 billion euros from 3.32 billion euros. Ebitda increased 2.1 percent. The company predicted that fiscal 2012 revenue will rise to 3.4 billion euros.
Douglas said in August that it wants to expand the online business, create an e-commerce position on its management board and offer “stronger online links” among brands. The company is in “good talks” with candidates for the new executive position, Kreke said today.
Ebitda at the perfume and cosmetics division rose 11 percent to 207.1 million euros, while earnings at the Christ jewelry business increased 19 percent to 36.8 million euros. The book unit’s Ebitda dropped 33 percent to 40 million euros, and the Hussel confectionery division’s earnings fell 14 percent to 5 million euros.
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