ARE the most painful steps over in the plan to turnaround Cape Town-based healthy footwear brand Green Cross?
Consumer brands giant AVI – which paid a whopping R382 million for Green Cross in 2012 – will certainly be hoping so…
Last month AVI disclosed that restructured Green Cross had seen a further deterioration in its turnover – which dropped 32% to R82 million in the half year to end December.
This followed store closures that have reduced the retail chain to just 29 stores. Green Cross also made headlines in 2019 when it closed down its manufacturing plant in Epping, and opted to import its footwear ranges.
Even more worrying was that operating profits at Green Cross slumped R19 million into the red compared with the R12m loss reported in the previous interim period.
This nasty performance stumble detracted from AVI’s mainstay footwear brands Spitz and Kurt Geiger – which managed a credible performance in a tough trading environment with combined profits of R224 million.
AVI reported that selling and administrative costs at the footwear segment were significantly lower due to cost cutting, completion of the Green Cross integration into Spitz and lower store costs in line with closures over the last twelve months.
AVI CEO Simon Crutchley confirmed the Green Cross volume loss was higher than Spitz and Kurt Geiger. Green Cross also saw retail trading densities impacted more during COVID-19, and there were 12 store closures since December 2019.
Crutchely also noted a 12.8% drop in Green Cross selling prices as well as a change in sales mix with lower retail sales and maintained wholesale volumes.
It seems the months ahead could see even further Green Cross store closures to “match retail space to brand opportunity”.
AVI’s patience with Green Cross must have been severely tested over the past four years – especially as other comfort footwear brands like Birkenstock stole a march on Green Cross. If profitable traction is not found quickly in Green Cross, the once valuable brand might end up trudging a very lonely path.
