Interim Report May 1, 2008 – January 31, 2009

Operating profit amounted to SEK 27.6 M

Nine months (May 2008 – January 2009)

• Net sales amounted to SEK 1,118.2 M (1,284.1), down 13% compared with the preceding year. Sales in the Group’s comparable stores decreased by 19% (neg: 3).
• Profit after tax amounted to SEK 13.3 M (120.0). Earnings per share before dilution of SEK 0.45 (4.13).
• The Group established 11 new stores (19).

Third quarter (November 2008 – January 2009)

• Net sales amounted to SEK 456.4 M (523.2), down 13% from the preceding year. Sales in the Group’s comparable stores decreased by 18% (neg: 5).
• Profit after tax amounted to SEK 13.6 M (61.5). Earnings per share before dilution of SEK –0.93 (2.10).
• The Group established 3 new stores (5).

CEO’S COMMENTS

The weak sales trend shown by Hemtex continued during the third quarter (November – January). Tougher times have clearly affected consumers’ willingness to spend and sales were very weak in all markets, resulting in a continued decline in earnings. During the period, December was the strongest month while by far the weakest performance was noted in January. For the period as a whole, November – January, this resulted in a year-on-year sales decrease of 13% and thereby a major dip in operating profit.

The Board of Directors has initiated a number of actions in order to recover its lost competitiveness and 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 has partially offset 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 and we see no net increase in stores in the Group during the next fiscal year.

• The important adaptation of the customer offering continued 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 the venture will continue. A continuous evaluation and adaptation to prevailing market conditions is in progress to turn around the weak sales outcome noted in recent months.

• The weak sales trend resulted in the share of costs rising sharply, a development that could not be reversed during the period, despite the implemented savings programs.

The gross profit margin weakened during the third quarter and amounted to SEK 52.5% (55.5). For the interim period from May 2008 – January 2009, the gross profit margin was 54.3% (54.3). Inventory was significantly lower than in the year-earlier period.

Hemtex has a strong brand name, a strong network of stores and committed and competent personnel. There is significant potential here to improve the chain’s profitability. Product range, price and communication strategies will be developed to realize this potential.


Kia Orback Pettersson,
Board member , and during the third quarter Acting President

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