Escada Unloading Primera, Looses 92 Million Euros In Latest Half

Troubled German fashion group Escada AG has announced plans to sell of key division Primera, but the resulting heavy write-down will plunge the fashion group further into the red.

Escada said that due to the write-down on Primera its preliminary first half loss would balloon to 91.7 million euros, or $128.4 million, in the six months ending on April 30, 2009, from a loss of 8 million euros, or $11.2 million, in the like period a year earlier.

The Munich-based house’s supervisory board approved the agreement to sell Primera, which comprises the labels Apriori, BiBA, Cavita and Laurel; the company said a late Friday release.

Escada did not reveal to whom, or for what price, it would unload Primera, but said the “contracts are set to be signed in the next few days.”

“As a consequence of this write-down the balance sheet loss already recognized in the Annual Financial Statement of Escada AG for fiscal year 2007/2008 now exceeds over half of the company's capital stock,” the group explained, underlining the its perilous financial condition.

The company now plans to call an extraordinary shareholders meeting “without delay,” but again did not say exactly when.

For the latest six months Escada Group and the discontinued Primera operations together scored sales at 248.2 million euros, or $347.5 million, a hefty 16.1 percent below the like period a year earlier.

Moreover, sales of the Escada brand in the latest six months fell 18.1 percent to146.5 million euros, or $205.1 million.

Leaving out the effect of the sale of Primera, Escada said that group losses for the six months would have been 17.8 million euros, $24.9 million.

Finally, the board of Escada forecast a low double-digit decline in turnover for the next six months.

Escada has suffered from weak sales for several seasons, and the company is threatened with collapse in the next few months if a planned capital increase to replace a 200 million euro bond, fails to take place.

In trading Monday on Escada shares fell 4 percent by lunchtime to 2.88 Euros, or $4.03, on Germany's small-cap index, SDAXI.

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