Operating loss amounted to SEK 163.3 M, whereof SEK 30.7 M comprised nonrecurring costs

​

Six months (January 2010 – June 2010)

• Net sales amounted to SEK 505.3M (566.2), down 10.8% compared with the year-earlier period.
• Sales in the Group’s comparable stores were negative 4% (neg: 24).
• Gross profit amounted to SEK 256.9M (282.5), corresponding to a gross margin of 50.8% (49.9).
• Loss after tax amounted to SEK 133.9 M (loss: 94.4). A loss per share before dilution of SEK 3.26 (loss: 2.99).
• Operating cash flow after investments was negative SEK 50.5 M (neg: 100.7).

The second quarter (April 2010 – June 2010)

• Net sales amounted to SEK 235.4M (276.2), down 14.8% compared with the year-earlier period.
• Sales in the Group’s comparable stores were negative 8% (neg: 22).
• Gross profit amounted to SEK 132.1M (135.3), corresponding to a gross margin of 56.1% (49.0).
• Loss after tax amounted to SEK 53.8 M (loss: 61.8). A loss per share before dilution of SEK 1.31 (loss: 1.83).
• Operating cash flow after investments was negative SEK 18.4 M (neg: 80.8).
• Inventories amounted to 141.5 M (290.8)

CEO’S COMMENTS

We are approaching the end of our nearly two-year-long transition from the old Hemtex to the new. The company’s new concept, product range and identity will be launched in nine days, with the Hemtex store on Götgatan in Stockholm serving as our flagship and model. Other stores in Sweden and Finland will receive a thorough facelift, outside and in. And, of course, we will not stop there. There are still major earnings improvements to be made. The new product range strategy will take time to implement and I expect the changes to the range to be fully completed in the first half of 2011. 

The company reported an operating loss of SEK 163.3 M (loss: 100.7) in the interim financial statements, SEK 30.7 M of which comprised nonrecurring costs. While this is naturally a disappointing result, it is also proof that our customer offering must be changed and modernized. With our current concept and product range, we are not competitive, and there is thus an imminent risk that our earnings will continue to deteriorate.

The current level of traffic to Hemtex’s stores is too low. Accordingly, we must increase traffic and become better at converting visitors into customers and bolstering average purchase amounts. The key to successfully meeting this challenge lies in having an attractive and inspiring product range, credible communications, a higher level of service and a strong customer focus. 

Accordingly, in-store personnel changes were implemented in mid-May to create a more professional organization with a clearer distribution of responsibilities and duties. The objective was to reduce the number of store managers and assign greater personnel and skills-development responsibilities to those who remained. Many cities now have one store manager for two or more stores. In addition, we established specialist positions for visual merchandisers, which means that we now have employees with expertise in how to present the product range and brand within our stores. Negotiations with the employees and trade unions concerned have now been concluded.

Numerous major changes were implemented during the January to June 2010 reporting period. For example, we:

- Developed a new store concept and product range, as well as a new identity and communication strategy.

- Increased the professionalism of our employee organization by reducing the number of managers and adding new specialist positions.

- Initiated the process to discontinue the Group’s presence in the loss-making markets of Denmark, Norway and Poland and halved the store portfolio in Finland.

- Improved the inventory turnover rate through enhanced control of the flow of goods and inventory situation, which resulted in a strengthened cash flow during the period. The appointment of Aditro Logistics as our new logistics partner will also entail efficiency enhancements and reduced logistic costs.

Many of these measures had a negative impact on our earnings for the interim reporting period. Nonetheless, I am convinced that they have been crucial to our efforts to achieve better control over the Group’s finances and together are creating favorable conditions for the introduction of the new Hemtex. At the end of next week, we will turn over a new leaf in our 37-year history as a specialist home textile retailer.

Erik Gumabon
President and Chief Executive Officer

Further information

Erik Gumabon, President and CEO.
Ulf Segerström, CFO.
Manuel Ferrer, Head of Pressoffice: +46 (0) 706-66 02 59.

Hemtex AB
Druveforsvägen 8
PO Box 495
SE-503 13 Borås, Sweden
www.hemtex.com
Email: ir@hemtex.se

Hemtex is the leading home textile chain in the Nordic region, with a total of 189 stores in August 2010, of which 143 were in Sweden, 37 in Finland, 4 in Denmark, 3 in Norway and 2 in Estonia. Of these stores, 167 are owned by the Hemtex Group and 22 by franchisees.Under a joint brand, the stores sell home-decor products with a focus on home textiles. Sales at the consumer level (including franchise stores) totaled SEK 1.28 billion, excluding value added tax. On June 30, 2010, the Hemtex Group’s annual sales amounted to SEK 1.23 billion. 

Tags: