Douglas Reviews Store Network after Weak Demand and Margin Decline
By Cian Muenster and Kira Britten
Douglas Faces Profitability Challenges Amid Shifting Consumer Trends
Aug 12 (Reuters) - German beauty retailer Douglas said on Wednesday it was reviewing its store network after weak consumer demand and intense price competition weighed on profitability in the third quarter.
Market Performance and Consumer Sentiment
Douglas' performance is closely watched for clues on consumer spending in Germany and France, its largest markets, as Europe's premium beauty market struggles to emerge from a prolonged period of weak consumer sentiment and slowing growth.
Financial Results for the Third Quarter
Its adjusted core earnings fell 19.4% from a year ago to €127.5 million ($147.0 million) in the April-June quarter, missing a Vara consensus of €131.5 million.
Competitive Landscape and Strategic Response
"The competition for share of wallet is fierce," CEO Sander van der Laan said in a statement, adding that Douglas was adjusting its pricing strategy and shifting investment towards e-commerce to cope with the situation.
Store Network Review and Operational Adjustments
The company, which is seeing an accelerated shift towards online sales, closed 31 stores in the first nine months of its financial year, compared with 12 a year ago.
Potential Store Changes
A company spokesperson told Reuters that the network review could result in selective openings, relocations, refurbishments or closures, but did not specify how many more stores could be affected.
Impact on Profitability
"We've opened a lot of stores in the last three years ... we need time for them to reach a run-rate sales level," Van der Laan said during a conference call. "These are basically hitting on the bottom line profitability percentage."
Outlook and Market Expectations
The retailer maintained its outlook for the 2025/26 fiscal year, after lowering the targets twice this year, in April and June.
Growth Projections
Van der Laan said Douglas had expected the market to grow by 4% to 6% in continental Europe, but now that number stood between 2% and 3% instead, with no growth seen in Germany and France.
Stock Performance and Additional Information
Douglas' shares were down 2.3% in early afternoon trading.
($1 = 0.8672 euros)
(Reporting by Cian Muenster and Kira Britten, Editing by Milla Nissi-Prussak)
