PARIS — As Creeks SA, one of the more prominent names in the French junior sportswear market, goes through a rigid restructuring, profits are improving as volume drops.
That’s the way the situation was detailed by Daniel Giroux, president, at the firm’s annual meeting here this month, when the company announced a net profit of $1.7 million (10.1 million francs at current exchange rates) for the year ended Aug. 31, 1993.
This follows a net loss of $6.1 million (36.3 million francs) for fiscal 1992. Consolidated sales dropped 7 percent for fiscal 1993 to $106.2 million (623.3 million francs).
The company attributed the sales drop in part to the poor French economy.
Also contributing to the decline was Creeks’ Creations Rivers division, which holds the license to manufacture and distribute Liberto jeans throughout most of Western Europe. Liberto sales were adversely affected by the devaluations of currencies in some of its key export markets, including Italy, Portugal and the U.K., said Giroux. Export sales fell roughly 13 percent for the last fiscal year.
Restructuring measures include revamping the Creeks product line, typically covered with catchy nonsense slogans in English for an American look, into a more classic sportswear collection. Creations Rivers, for its part, has been working on controlling inventories. It is also breaking down the Liberto collection into more distinctly targeted lines for men, women and juniors.
Both branches of Creeks have laid off about 120 people combined, Giroux said, adding that the current fiscal year “will be a year of consolidation.” He expects sales to drop another 15 to 20 percent for the year ending Aug. 31, 1994. Profits, however, will continue to improve, thanks to the reduction of overhead, better inventory control and an anticipated improved sell-through on the Creeks and Liberto apparel lines.
Creeks was active in the U.S. between 1986 and 1989. The company sold its Creeks line to department and specialty stores, although in small quantities, and had a minor following from boutiques in New York and Los Angeles. The company closed its business there because, as one executive acknowledged, it had neither the correct product nor the distribution know-how.
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Creeks still has its California business registered, but it is not active.
“Our priority is on France,” said Giroux, referring to the Creeks label. “At a second stage, we could expand exports to neighboring European countries.”
He emphasized that the U.S. will not be explored before the first two markets, if at all.