On Wednesday the Otto Group published its financial figures for 2019-20 (February 29). Revenues increased by 4.8% to €14.3 billion. Pure online revenues increased by 6.2% to around €8.1 billion. This growth was reflected in significantly better earnings in all segments and at all earnings levels. EBIT rose from €222 million to €432 million and net income from €177 million to €214 million.
GROWTH STRATEGY
The good key figures are the result of the growth strategy that was defined three years ago. The Otto Group focuses on 10 companies and invests disproportionately in them. In the multichannel retail segment, these are Otto.de, Crate & Barrel, Bonprix, the Witt Group, About You and the Mytoys Group. These increased by 6.5% compared to the 2018-19 financial year and currently account for 82% of total group sales.
However, the business figures reflect the consumer world before the corona pandemic. But what is the situation now? How have the months of the lockdown affected the Otto Group?
CORONA EFFECT
Alexander Birken, chairman of the executive board and CEO of the Otto Group, said: "Corona has shown us how quickly good business figures fade into the background. The overall economy and the consumer climate have collapsed so sharply, that is something we can see in all business areas of the Otto Group. The textile sector worldwide will experience a drop in demand and margin losses, and this will affect us.”
Birken continued: “We are respectfully optimistic, but we also see many opportunities that this new situation now offers. With this financial tailwind, the digital strategic direction and our very well developed technical infrastructure as well as our corporate culture, we are respectfully optimistic to master the economic challenges caused by the corona pandemic well and to emerge from the crisis even stronger in the medium term."
Especially in the second half of March, one could notice that people had something else in mind than consumption, said Birken. This then changed in April with significant growth, but with different product range structures than normal. Birken said, "Everything that we lost in March, we were able to recover in April. Thanks to the wide range of products on offer, we were able to react extremely quickly and flexibly and record good sales.”
SHIFT OF THE ASSORTMENT
What did the range shift look like? After two weeks of shock, it was particularly noticeable that the ordering behavior was strongly geared towards furniture, DIY products, household appliances, technology and everything that beautified your own four walls. Products that support homeschooling were also in demand. After a while also the fashion assortments gradually started again.
ONE MILLION NEW CUSTOMERS
In March and April alone, the Otto Group had 300,000 new customers more than in the previous year. Since January to the end of April there are over 1 million new customers.
WHAT DOES THE FUTURE HOLD?
DIGITALIZATION
There are three reasons why the Otto Groups sees itself well positioned and sees very clear competitive advantages over others. Birken said: “The stringent investment in digital models is one of the reasons why we see ourselves as well positioned for the future. Today we are where many stationary retailers want to go first. We are there where online and offline are merged. We want to continue developing Otto into a platform. There is great demand from brands and retailers who want to go to the Otto platform. We are currently considering adding 1,000 more retailers and brands to the platforms around the topic of home and living in order to position them more strongly. "
MOBILE WORKING
How can you further develop products and projects remotely? What technologies do you need? These issues need urgent discussion, said Birken, in order to shape the necessary cultural change in working life. “It goes far beyond phone calls and video chat, what we can use wonderfully is that one should work across hierarchies and across functions. The entire Otto Group has never been as fast and agile as it is today. We don't want to go back to the new normal; we want to move forward. I'm not longing for the hours I've spent at airports and train stations–now is a great opportunity to implement changes.”
VALUES
“We won’t give up values in the wardrobe of digitality,” said Birken. Especially in times of crisis, fair dealings with suppliers and business partners are substantial. The goal continues to be emission-free by 2030 to continue to trim production and sales for sustainability. So there are many opportunities and reasons for optimism at the Otto Group. In times of corona, however, all of this should be enjoyed with caution, as Petra Scharner-Wolff, executive vice president finance, controlling and human resources, also emphasized at the end of the press conference: “Our motto is stay optimistic but prepare for the worst.“
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