Hemtex reports operating profit of SEK 84 M

In Hemtex’s interim report for the first six months of the 2007/2008 fiscal year, it is reported that consolidated sales in comparable stores declined by 2 percent, with a particularly weak trend noted in Finland. During the interim report period, sales rose by a total of 18 percent to SEK 761.0 M (646.6). Operating profit amounted to SEK 84.0 M (90.4), a decrease by 7 percent and resulting in an operating margin of 11.0 percent (14.0).

“Since we had planned for higher sales, we accumulated inventories and therefore incurred costs that were not matched by sold volumes. We also experienced disturbances in the flow of goods, which meant that our new products did not always reach the stores when they should have. With the aim of strengthening our profitability, we will now be applying a strict purchasing strategy and will gradually adapt our costs in order to better capitalize on the economies of scale represented by our large volumes which is a part of the now implemented action program,” says Hemtex President, Anders Jansson.

During the second quarter, sales in comparable stores within the Group declined by a full 5 percent. Sales decreased by 3 percent in Sweden and by 18 percent in Finland, while sales rose by 3 percent in Denmark and by 7 percent in Norway.

“Competition in Finland has intensified and we will make a substantial review of the Finnish operations as the new manager starts. The trend in comparable stores in Denmark and Norway was more gratifying, as were the favorable customer responses to the first six Hemtex & More stores that were opened during the autumn,” says Anders Jansson.

The Group opened a total of ten new stores during the interim report period, including four in Sweden, three in Finland, two in Norway and one in Estonia. Hemtex expects the Group to establish about 25-30 stores during the 2007/2008 fiscal year. In addition, one franchise store was opened in Poland during the interim report period and another was opened at the end of November. Hemtex sees the potential to grow in new markets via both Group-owned stores, as is the case in Estonia, and via franchise stores, as is currently occurring in Poland.