Hemtex’s interim report: strong rate of profitable expansion

The trend of rapid and profitable growth is holding up for Hemtex, the Nordic region’s leading home textiles chain. During the second quarter of the company’s split fiscal year, covering the period August 1 - October 31, 2006, net sales rose 23% to SEK 346.9 M. The increase in the Group’s comparable stores was 6% (6).

Profitability also improved. Operating profit increased by 33% to SEK 47.1 M, giving an operating margin of 13.6% (12.6). Favorable sales growth, a considerably strengthened gross profit margin and acquisitions of franchise stores contributed to the positive earnings trend.

During the first six months of the fiscal year, operating profit rose 21% to SEK 90.4 M. Net sales increased to SEK 646.6 M (526.0).

Hemtex is maintaining its high establishment rate. During the second quarter, the Group opened 13 new stores. In addition, 14 stores were acquired from franchisees. During the period covered by the interim report, the Group opened 16 new stores – nine in Sweden, four in Finland, two in Norway and one in Denmark. A total of 17 stores were acquired from franchisees.

“During the second quarter, the organization performed outstandingly in implementing the expansion plans adopted earlier and, after further expansion during November, we are well equipped for this year’s Christmas shopping period. The fact that we have strengthened our gross profit margin in parallel with the expansion process provides further potential for the Group’s development,” says Hemtex President Anders Jansson.

During November, the Group’s store expansion continued, with 13 new establishments and the acquisition of a further 12 franchised stores, as described in previous reports and a separate press release.