CVC-Owned Douglas’s Bonds See Record Gain as Profit Rises – Bloomberg2020-02-19
CVC-Owned Douglas’s Bonds See Record Gain as Profit Rises (1)
2020-02-19 12:20:15.508 GMT
By Fabian Graber and Irene García Pérez
(Bloomberg) — Bonds of Douglas GmbH, the German beauty
retailer, reached the highest level since July 2018 after
reporting an increase in earnings in the key Christmas shopping
The company’s 335 million euros ($362 million) of
subordinated bonds that come due in 2023 jumped as much as 11
cents on the euro to 91 cents on Wednesday, the biggest gain
since the notes were issued five years ago, according to data
compiled by Bloomberg.
Douglas, which boasts a five-story flagship store in
Frankfurt, is transforming its business model to stay
competitive amid changing consumer behavior toward online
shopping. In the three months to December, the most important
quarter for retailers, earnings increased 5.1% to 196 million
euros and revenues jumped 6% compared to a year earlier, the
company said in a statement on Wednesday.
“This is further proof that the company’s fundamentals are
improving, which has been happening for a few quarters now,”
said Anthony Giret, an analyst at Spread Research.
The company, which has 2.3 billion euros of debt, remains
under pressure from online rivals. Competition will limit
Douglas’s earnings margins and cash flow this financial year,
according to a report by S&P Global Ratings this month. The
rating agency downgraded Douglas one step to B-, six levels
below investment grade, in January.
The rebound bodes well for Douglas’s owner CVC Capital
Partners which may be looking at ways to cash in on its
investment. The private equity firm is working with Goldman
Sachs to explore options for Douglas, including a public listing
or a sale, Reuters reported last week quoting people familiar
with the matter without naming them.
Douglas’s Chief Executive Officer Tina Mueller declined to
comment during an earnings call on Wednesday on whether the
company was considering a listing or a sale. Mueller said that
the firm is working with CVC to
evaluate options to address debt maturities due in mid-2022.