Fashion retailer Tendam’s core earnings are up 10% – ET Retail

Spanish fashion retailer Tendam reported on Thursday a 10 per cent rise in core earnings for its 2023 financial year and forecast lower to steady first-quarter growth as the company mulls an initial public offering.

The owner of the Women’s Secret, Cortefiel and Springfield chains is ready to launch an IPO on the Spanish stock exchange as soon as before the summer, which starts at the end of June, according to a person familiar with the plans who said offerings in other markets were not being considered.

Chief Executive Officer Jaume Miquel told Reuters last month that the company planned to launch an IPO during its current financial year, which ends in February 2025, following beauty group Puig’s market debut in May, Spain’s largest IPO in almost a decade.

Tendam said on Thursday recurring earnings before interest, taxes, depreciation and amortisation (EBITDA) reached 313.3 million euros (USD 340.8 million) between March 2023 and February 2024.

“With a view to stepping up this growth, the company continues evaluating potential strategic alternatives, including the possibility of an initial public offering of its shares on a regulated market,” Tendam said in a statement.

Spain’s third-largest fashion group after Zara owner Inditex and Mango said its revenue rose 6.5 per cent to 1.29 billion euros, marking a slowdown from 2022, when most fashion retailers were still benefiting from a post-pandemic shopping spree. Spanish stores and online sales accounted for around 70 per cent of sales.

Still, its gross margin rose by 1.2 percentage points to 62.5 per cent in 2023 and the company reported 112.9 million euros of free cash flow during the period, 29.8 per cent more than in 2022. It expects to increase sales by at least 5 per cent this year.

“The natural place for a company with results like this is the public market,” the source said, adding that the company had shown its debt was manageable. In March, Tendam paid 110 million euros for all outstanding senior secured notes, four years before maturity.

Tendam said that based on preliminary data in the March to May period, like-for-like revenue grew by 6% from a year ago, while recurring EBITDA rose between 8.5 per cent and 10.4 per cent.

Miquel said “the fiscal year 2024 has started very well”, keeping Tendam “excited about the growth opportunities ahead”.

Tendam’s equity value could reach between 2.2 billion and 2.7 billion euros, according to a research note by Bestinver.

The company, which has been owned by CVC Capital Partners Plc and PAI Partners since 2005, has been expanding as a multi-brand retailer in recent years, with a focus on growth in Spain and Latin American countries such as Mexico, where it can sell its fashion items at higher prices.