Interim Report May 1, 2008 – October 31, 2008
Operating profit amounted to SEK 5.3 M
Six months (May 2008 – October 2008)
• Net sales amounted to SEK 661.8 M (761.0), down 13% compared with the preceding year. Sales in the Group’s comparable stores decreased by 19% (neg: 2).
• Loss after tax amounted to SEK 0.3 M (profit: 58.5). A loss per share before dilution of SEK 0.01 (earnings: 2.02).
• The Group established 8 new stores (10).
Second quarter (August 2008 – October 2008)
• Net sales amounted to SEK 309.1 M (375.4), down 18% from the preceding year. Sales in the Group’s comparable stores decreased by 25% (neg: 5).
• Loss after tax amounted to SEK 6.7 M (profit: 22.6). A loss per share before dilution of SEK -0.23 (earnings: 0.77).
• The Group established 7 new stores (5).
The weak trend previously noted by Hemtex continued during the second quarter (August-October). Tougher times have clearly affected consumer willingness to spend and sales were notably weak in all markets, resulting in a continued decline in earnings. For the period as a whole, from May to October, this resulted in a year-on-year sales decrease of 13% and thereby a major decline in operating profit.
The Board of Directors has initiated a number of actions in order to steer Hemtex back to profitable growth in the short and long term.
• A cost-saving and efficiency-enhancement program is in progress within the Group, which will partially offset the effects of a decline in sales by reducing costs in comparable stores by at least SEK 35 M during the fiscal year. About ten stores are being monitored for potential divestment or discontinuation. We have lowered the establishment rate for the current fiscal year.
• The important adaptation of the customer offering was initiated during the quarter, meaning that, over time, Hemtex will represent a strong price offering and inspiration in terms of interior design. The “Simple changes” concept received a favorable response and will continue.
• In November, Hemtex launched its first E-commerce store in the Swedish market. The planning and assessment for starting E-commerce stores in other markets is underway.
• In accordance to the pressrelease that was published on November 10, 2008, the Board has decided to change President and CEO for Hemtex.
The gross profit margin improved during the second quarter, amounting to 59.7% (54.6). For the interim period from May to October, the gross profit margin was 55.6% (53.5). Inventory is now in balance.
Hemtex has a strong brand name, a strong network of stores and dedicated staff, factors that represent significant potential for the improvement of the chain’s profitability. Product range, price and communications strategies will be developed to realize this potential.
Kia Orback Pettersson,
Acting President, and Board member