Beter Bed Holding

Annual Report 2014


Dear Reader,

2014 was a year with two faces for Beter Bed Holding. After a weak start, which followed a disappointing order intake in the final months of 2013, the order intake picked up in the Netherlands at the end of the first quarter of 2014. We saw a similar development in Germany and Austria in the second quarter. Revenue rose strongly in the second half of 2014 at all the formulas in all the countries in which we are active, with the exception of Switzerland. This meant Beter Bed Holding was ultimately able to achieve a 1.8% increase in revenue. The like-for-like order intake for the full year was +4.8%.

In addition to the focus on top-line growth, the company was able to take structural next steps forward with respect to improving margins, reducing net working capital, limiting complexity and, 'last but not least', with respect to achieving innovation at the Beter Bed and El Gigante del Colchón formulas and product and brand innovations at M Line and Alpine Plus.

Expenses developed in a controlled manner and any increases in expenses were aimed at strengthening the commercial power in the field of marketing, innovation and e-commerce and improving service and customer satisfaction. The policy of reducing rents (in combination with fewer square metres whenever possible) was continued. The Slaapgenoten, Matrassen Concord Netherlands and Matrassen Concord Belgium formulas were discontinued.

Propensity to buy in the home furnishings segment in Germany initially remained at the low level of 2013. There was greater movement in the market at the end of the second quarter. Matratzen Concord was able to pick up on this trend and it deployed targeted marketing activities in order to translate it into substantially higher revenue for the remainder of the year. As a result it was possible to increase market share again in 2014. While online revenue developed positively, it continues to constitute only a limited share of total revenue. Matratzen Concord in Austria had an extremely successful year that was driven by successful promotions. Consumers were less keen to buy in the home and bedroom furnishings segment in Switzerland.

The recovery in the Netherlands, at primarily Beter Bed, is a result of the recovering housing market on the one hand and the renewed and contemporary look and feel of the stores, the new advertising campaign, the new logo and the higher service level on the other. The customer satisfaction benchmark, Net Promoter Score (NPS), was successfully introduced in mid-2014. A total of 45 stores were successfully refurbished in 2014. The other stores will be refurbished in the first half of 2015. Beter Bed’s online revenue has grown slightly and amounts to approximately 5% of the total revenue. Beter Bed opened two new stores in Belgium.

El Gigante del Colchón also had an excellent year. The restyled modern stores have caught on well. The number of stores is also once again beginning to grow gradually. We expect to be able to strengthen our position in the Spanish market in tandem with the recovering market in the country.

The company expects the positive revenue trend of 2014 to continue in 2015. The economic outlook remains moderately positive, as does the forecast for consumer spending. The focus remains fully on (like-for-like) growth in revenue and consequently on formula and product innovation, omni-channel e-commerce and customer satisfaction. In addition to completing the refurbishment of the Beter Bed stores, the process of making the stores at the other formulas more competitive, attractive and contemporary will commence following the successful conclusion of the pilots that are currently underway.

Improving margins, stringently controlling expenses and reducing net working capital will obviously continue to receive our full attention.

The company can look back on a successful year with a good recovery in revenue and operating profit. We understand that none of this would have been possible without the fantastic efforts and dedication of our employees. We would therefore like to take this opportunity to thank them sincerely and wholeheartedly.

Yours sincerely,

Ton Anbeek,
Chief Executive Officer

Uden, The Netherlands, 12 March 2015