Weaker second-quarter sales trend has adverse impact on Hemtex’s earnings
Hemtex, the leading home textile chain in the Nordic region, did not fully defend its market shares in the Swedish market for home textiles during the second quarter. As a result of weaker-than-expected sales, Hemtex’s pretax profit for the second quarter of the 2007/2008 fiscal year, the August 1 to October 31 period, will be lower than in the second quarter of the preceding fiscal year. This decline is occurring at the same time as initiatives involving new store formats and an expanded product range are being implemented, which are resulting in transitional problems within store operation during the current quarter.
”With the anticipated sales growth, we will not obtain coverage for increased costs in existing and new stores and the logistics required to manage the increased inventory levels we have noted during the autumn. At the same time, the need to manage our inventories is having an adverse short-term impact on the favorable trend in the gross profit margin on our retail products,” says Hemtex President and CEO, Anders Jansson.
Actions have been initiated with a focus on improving the trend within comparable stores. With respect to the inventory levels, these are expected to have been corrected by the close of the third quarter, meaning by the end of January 2008.
Market share of 29.8 percent for Hemtex in January-September 2007
During January-September 2007, Hemtex experienced a weaker sales trend in the Swedish market for home textiles. This is confirmed by the latest figures from the GfK market research company, which show that Hemtex’s market share for the period amounted to 29.8 percent, compared with 30.9 percent in the year-earlier period. According to GfK, the total market increased by 10.6 percentage points during January-September, compared with the year-earlier period.
”We have not succeeded in fully defending our strong market shares in the Swedish home textile market, although our share of this market over the most recent 12-month period amounted to 30.9 percent. For the quarter covered by GfK’s latest report, July–September, our market share was 28.7 percent (30.7),” adds Hemtex’s President, Anders Jansson. Compared with September of the preceding year, 10 stores in the Swedish market have been added plus a further 17 stores abroad.
Efforts under way via Hemtex & More
Home textiles, which represent the core of the company’s operations, provide a solid ground for the efforts to broaden the product range that are being implemented during autumn 2007. In addition to the broadening of existing stores, we will be opening the first two Hemtex & More volume stores on October 25 in Stockholm. With 700-1,000 square meters of retail space, Hemtex & More will offer a considerably wider and larger assortment of products for the home, compared with what customers are currently accustomed to.
”With a broader range of products for the home, including a developed range for children, we will have an opportunity to continue to grow, also within areas outside home textiles, where we aim to defend our already strong market shares,” says Hemtex’s President and CEO, Anders Jansson.
Hemtex’s interim report for May-October 2007 will be published on Thursday, December 6, 2007.