Pwt Group A/S

Management's review

THE BUSINESS PLATFORM - A BRAND HOUSE6 Swedish stores, while 11 Danish stores, 8 Norwegian, PWT Group is a leading Nordic brand house within and 6 Swedish stores are franchises. Wagner primarily men’s fashion, operating in both the B2B, B2C, and D2C sells the Group’s own brands.markets.PERFORMANCE IN THE FINANCIAL YEAR UNDER PWT Brands offers distinctive brands with a full product REVIEWrange within menswear. PWT Brands develops, produc-Retail B2C offline has impacted the results for 2023 es, and sells a wide range of strong brands:positively. Increased revenue and a higher coverage ra-• Lindberghtio have led to Retail performing better than expected, • Bisonbut increased rental and personnel costs, as anticipat-• Junk de Luxeed, resulted in a result lower than in 2022.• Morgan• Jacks Sportswear Intl.PWT Brands B2B has impacted the results for 2023 positively. Although revenue has fallen, a signicantly These brands are sold to approximately 700 independ-higher coverage ratio has led to a better result than ex-ent retailers in 27 countries, as well as to PWT Groups’ pected. Despite increased expenses, especially for per-two retail chains Tøjeksperten and Wagner.sonnel, the results are on par with last year.PWT Group’s two retail chains are operated under sep-The B2C online business revenue has increased signif-arate names and focus on different target groups. The icantly both in terms of expectations and compared to strategy also sets out to further optimize management last year, but earnings, due to substantial marketing ex-and back-ofce functions handling procurement, mar-penses, were below expectations.keting, and administration in order to capitalize on syn-ergies and obtain economies of scale.The Group’s EBITDA was DKK 124 million in 2023, which is satisfactory but below last year.Tøjeksperten is the largest menswear omni-channel retailer in Denmark with 112 stores across the coun-Despite the lower result, the result before tax (EBT) for try, of which 57 are owned by the Group, while 55 are 2023 is still assessed as satisfactory and in line with franchises. Tøjeksperten focuses on quality clothing expectations from the previous years annual report. So, for fashion-conscious men of all ages and sells both its despite challenges and increased costs, PWT managed own and external brands.to maintain protability and achieve the nancial tar-gets.Wagner is a Scandinavian menswear omni-channel re-tailer, which has 20 stores in Denmark, 8 in Norway, and Total revenue increased to DKK 803 million in 2023 12 in Sweden. Of these, the Group owns 9 Danish and from DKK 794 million in 2022. PWT GROUP A/STØJEKSPERTENWAGNER PWT BRANDS100%100%100%100%100%PWT PWT PWT WAGNER COGS APSGERMANYSWEDEN AB* NORWAY ASCHINA APSGMBH*100% Wagner Birsta AB 100% Wagner Karlstad AB 100% Wagner Växjö ABA satisfactory gross margin of 38.4% was realized, as • Improving the quality and relevance of our prod-expected, slightly lower than last year due to increased ucts.costs.• Increased focus on the product mix and merchan-dising in the stores.Prot for the year was DKK 73 million.• Continued optimization of retail focusing on secur-ing earnings in each store, renewing the stores, and In 2023, DKK 44 million was invested primarily in new building bigger stores in attractive locations.stores, expansion/improvements of existing stores, as • Continued investments in the Group’s online sales, well as in a new website and IT security. A dividend of including B2C, D2C, B2B, and omni-channel sales.DKK 75 million has been distributed. The decision to distribute was made while ensuring that there is suf-EVENTS AFTER THE BALANCE SHEET DATEcient liquidity in the company, which led to the distribu-No material events have occurred after the balance tion being made in two steps during 2023.sheet date.Net cash and cash equivalents on 31 December 2023 OUTLOOKamounted to DKK 96 million, which is very satisfactory.We aim to maintain the same level of performance, however, we anticipate a potentially challenging year OPERATIONAL OPTIMIZATIONcharacterized by further increases in cost levels, be-The ongoing efforts to optimize PWT Group’s business yond our control. We have already observed xed costs and constantly improve our customers’ experience with rising, and the uncertain demand from customers is the Group’s brands and retail chains continued in 2023 heavily influenced by macroeconomic developments, and included:that are still uncertain. Nevertheless, we remain com-mitted to navigating these challenges with agility and proval of the strategy, Management assesses relevant determination, staying true to our long-term vision and business risks. For the purpose of the risk assessment, values.Management considers, when required, the policy on currency risks adopted by the Board of Directors.Naturally, the outlook will depend on parameters im-pacting consumer behavior and disposable amounts. FINANCIAL RISKSThese include:The Group manages its nancial risks centrally and co-• The war in Ukraine and its impact on the economy.ordinates liquidity management and funding. Together • High inflation rates and potential additional nega-with the Board of Directors, Management annually as-tive consumer behavior.sesses the Group’s most important risks and, by way of • General uncertainty related to the customers’ -regular monthly reporting, reports on aspects that may nancial circumstances.materially affect the Group’s activities and risks. The corporate policy is to not engage in speculation with In general, 2024 is expected to be a challenging year, nancial risks. At the same time, we follow a conserva-possibly affected by the above uncertain conditions. tive dividend policy where we only distribute as we are EBITDA is expected to be 15-20% lower than in 2023.sure that we have sufcient liquidity to ensure the com-pany’s operations.PWT Group has strengthened its nancial position sig-nicantly in the past 3 years. The high earnings have INTERNAL CONTROL AND RISK MANAGEMENT been spent on consolidating the company, repaying all SYSTEMS FOR FINANCIAL REPORTING PURPOSESdebts, and achieving a very high solvency ratio. We con-The Board of Directors and the Executive Board are tinue the very conservative dividend policy model for overall responsible for risk management and internal distribution where we distribute in steps so we are sure controls in the Group for nancial reporting purposes.there is sufcient liquidity to make the distribution. As a The organisational structure and internal guidelines result, PWT is quite condent about the future and has make up the control environment together with legisla-built a healthy and stable nancial foundation.tion and other rules applying to the Group. The Group’s organisational structure and staff numbers are ad-RISK MANAGEMENTdressed at board meetings. In relation to the nancial Risk management is an integrated part of the manageri-reporting process, Management pays special attention al process in PWT Group to limit uncertainties and risks to the following internal controls, supporting a satisfac-in relation to the nancial and strategic targets dened tory nancial reporting process:for the Group. As part of the annual update and ap-• Credit rating of debtors• Assessment of the valuation of USD positions• Assessment of accruals and valuation of invento-riesPWT Group has established a “Group reporting pro-cess” comprising monthly reporting in the form of budget follow-up, performance assessment and com-pliance with dened targets.On the basis of the Group reporting and reports on ot-her selected areas, four board meetings are held each year at which the reporting received is discussed and assessed.Moreover, key employees from the Group participate in the board meetings at which they describe and account for the risks and controls within their areas of respon-sibility.CAPITAL RESOURCESManagement regularly assesses the appropriateness of the Group’s capital resources.Based on net cash and cash equivalents of DKK 96 mil-lion at 31 December 2023 and the credit facilities made available by Spar Nord, the cash resources are expect-ed to be sufcient in 2024.