Hemtex interim report: high growth rate and strong profitability

The high pace of expansion continues for Hemtex, the leading home textile retail chain in the Nordic region. During the third quarter of the fiscal year, November 1, 2005 – January 31, 2006, net sales rose by 55% to SEK 378.8 M.

Profitability also improved. Operating profit increased by 78% to SEK 83.0 M, resulting in an operating margin of 22.0% (19.1). Favorable sales growth, a strong gross profit margin, newly established stores and the acquisition of franchise stores contributed to the positive trend in earnings. During the first nine months of the fiscal year, operating profit rose by 94% to SEK 157.7 M. Net sales in the same period increased to SEK 904.1 M (627.4). Hemtex continued to maintain a high rate of establishment. In the third quarter, the Group established four new stores. In addition, two new stores were acquired from franchisees. During the interim period, the Group established 18 new stores – eight in Sweden, eight in Finland and two in Denmark. In total, 14 stores were acquired from franchisees. “In the fourth quarter, we will open six stores, which means that during the 2005/2006 fiscal year, a total of 24 new stores will be established by the Group. We also plan to maintain a high rate of establishment during 2006/2007, when we estimate that we will open slightly more than 30 Group-owned stores,” says Hemtex President and CEO, Anders Jansson. On March 23, Hemtex’s first store in Norway will be opened in the CC Vest shopping center. Agreements were signed with regard to an additional six store establishments in the Oslo region. For further information, contact: Anders Jansson, President and CEO or Tommy Svensson, CFO: +46 (0) 33-20 69 00. Visit the Hemtex website at www.hemtex.se