YNOT EUROPE – Generating sales revenues of 39.9 million euros and a near-break-even operating result of -0.1 million euros, Beate Uhse, the German adult lifestyle company, closed the first three months of 2011 according to plan. The consistent implementation of a restructuring programme has resulted in the expansion of the online mail-order business, the closure of unprofitable shops and the centralisation of wholesale business.

“Our performance reflects the success of our strategic restructuring programme,” said Serge van der Hooft, chief executive officer and spokesman for the company’s management board.

E-commerce: more than 50 percent of sales revenues
The group’s mail-order business is increasingly driven by e-commerce, which contributed an increased 52.6 percent to sales revenues.

“The internet is an ideal platform for adult products, as it affords anonymity and peer product reviews, and it is particularly suited to our female clients,” said Chief Operating Officer Sören Müller. “It allows us to respond very quickly to customers’ wishes and to reach younger customers with a strong affinity for online purchasing.

In line with the growth in online business, the number and frequency of mail-order catalogues has been reduced. While this reduced sales by 7.7 million euros to 17.5 million euros during the first quarter, it had an immediate impact on profitability. In the mail-order business, first-quarter earnings before interest and taxes improved from the previous year’s 2.0 million euros to 2.4 million euros despite the decline in revenues.

Retail business now on a healthy foundation
By the end of March 2011, the number of brick-and-mortar stores had been reduced by a total of 29 properties. This includes the sale of Sandereijn B.V., the Dutch retail chain with 10 stores.

“We deliberately closed and divested those shops that do not fit in with our plans for the future,” Müller said. “While the reduction in the number of stores reduced retail sales to 11.7 million euros in the first quarter 2011, this will have a positive impact on the bottom line. Losses in the retail business for the first quarter amounted to -0.4 million euros.”

Retail remains an important activity for the group, according to Serge van der Hooft, because a real-world presence not only contributes to Beate Uhse’s sales and purchasing power but also enhances the company’s brand awareness with consumers.

Video-on-demand optimized entertainment division
Building on its proprietary formats, the Beate Uhse Group’s entertainment business again held its ground against competitive pressure from free internet offerings. The Group’s offerings have been technically refined in order to keep pace with consumer and industry trends.

According to Müller, Beate Uhse’s “MovieOn” VOD platform has proved popular, offsetting losses in the audiotext sector due to an increase in TV advertising regulations. The entertainment business generated sales of 2.4 million euros and an operating result of 0.2 million euros.

Wholesale activities centralised
With 2,500 customers in 32 countries, Beate Uhse’s wholesale arm, Scala Playhouse, has established itself as a market leader in the sector. The warehouse of the German wholesale subsidiary, ZBF Vertriebs GmbH in Wiesbaden, Germany, has been relocated to Almere, Netherlands, with a view to exploiting the modern distribution centre already used by Scala Playhouse more effectively. The first joint in-house exhibition in the spring coincided with Scala’s 40th anniversary. The 1,400 square metres of exhibition space were used not only by Beate Uhse’s wholesale business, which presented its well-known proprietary brands, ToyJoy, Extase and Playhouse, but also by suppliers, who used the opportunity to exhibit their productsat their own exhibition booths.

Thanks to its state-of-the-art positioning and its own brands, the wholesale business was able to defend its market share despite the very tight situation in the adult entertainment sector. As expected, sales revenues declined to 8.3 million euros, which resulted in an operating loss of 1.4 million euros.

Projections for 2011 confirmed
As new agreements were signed with German banks, credit lines were reduced to 33.0 million euros by late April. The loans granted by the Dutch ING Bank B.V. have been cut from the original amount of 25.0 million euros to 18.0 million euros.

The company has reduced its debts to 31.4 million euros. The management board plans to cut outstanding loans to 18.6 million euros by 2013 in order to obtain greater freedom and independence.

“We are convinced of the growth potential in our businesses,” van der Hooft said. “In view of the recent performance, we maintain our projections for 2011. The management board projects sales revenues of 140 million euros to 144 million euros for the full year 2011. The operating loss, excluding non-recurrent effects, is to be reduced significantly from 2010’s -19.5 million euros to between -6 million and -4 million euros.”