Baltika improved in 2013 first quarter result by 440 thousand euros. Quarter’s net loss was 603 thousand euros, which signifies compared to 1,043 thousand euros in prior year an improvement of 42%.
Improvement in result was achieved owing to 7% sales growth and in a situation where first months of the year sales have been more volatile and susceptible to weather then in year 2012. Most fashion retailers were impacted by unusual cold March, which either decreased or postponed client need to purchase spring clothing. Meanwhile quarters first months January and February were strong and met the sales plan.
Retail sales grew in all Baltic countries: Estonia 17%, Latvia 9% and Lithuania 6%. Sales decreased in Russia and Ukraine, which was due to decrease in sales area; sales efficiency grew on all of Baltika’s markets, reaching on average 8%.
Quarter gross margin improved by 0.2 percentage points compared to same period in prior year. Baltika’s continued cost control also had a positive effect: operating expense to revenue ratio improved by 2 percentages to 55%.
Management believes based on current results that company will achieve financial targets set for year 2013.
Highlights from the period until making quarterly report public
- Baltika has opened in the first quarter new concept flagship stores of its leading brand Monton in shopping centres of Baltic capitals: Viru Center in Tallinn, Galerija Centrs in Riga and Akropolis in Vilnius.
- Baltika’s newest brand Bastion showed its spring-summer collection designed for the first time in Baltika on 30 January.
- Monton e-store montonfashion.com had its first anniversary in February and compared to the launch period sales have increased in comparable months nearly three times.
- AS Baltika signed in April a franchise agreement to open Monton fashion stores in Belarus with retail operator Valanga OOO. The plan involves opening in the next five years at least 5 Monton stores with 150-250 sqm operating area in Belarus. The first Monton store in Belarus and at the same time Baltika’s first store under franchise agreement will be opened this year in August in Minsk.
- In line with the 2013 objective to increase international competitiveness of all brands in Baltika Group brand portfolio, company participates in project Design Bulldozer. Design Bulldozer is a pilot project running until 2014, which is originated by Estonian Design Bureau, Ministry of Economic Affairs and Communications and Enterprise Estonia to increase the capabilities and export potential of Estonian companies.
- In cooperation with Dan Pearlman agency Baltika started development of new store concepts for Baltman and Bastion brands.
- Ivo Nikkolo appointed as new brand manager Kaie Kaas, who has long-term experience working in Baltika Group and is leading also Bastion brand.
- Annual general meeting of shareholders that took place on 10 May approved the 2012 Annual report and profit allocation. AS PricewaterhouseCoopers was elected as the auditor for financial year 2013.
- In April new Monton stores were opened: SkyMall shopping centre in Kiev, Ukraine, Galleria Riga centre in Latvia and Ufa Semja centre in Russia; Mosaic store in Ufa Mega centre in Russia and in Estonia mixed brand store Moetänav. Ivo Nikkolo store was opened in Galleria Riga centre in Latvia.
Consolidated statement of financial position
| 31 March 2013 | 31 Dec 2012 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 815 | 2,078 |
| Trade and other receivables | 2,125 | 1,836 |
| Inventories | 11,455 | 11,471 |
| Total current assets | 14,395 | 15,385 |
| Non-current assets | ||
| Deferred income tax asset | 637 | 637 |
| Other non-current assets | 1,104 | 1,088 |
| Property, plant and equipment | 2,810 | 2,256 |
| Intangible assets | 4,090 | 4,150 |
| Total non-current assets | 8,641 | 8,131 |
| TOTAL ASSETS | 23,036 | 23,516 |
| EQUITY AND LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 1,649 | 1,598 |
| Trade and other payables | 6,264 | 7,005 |
| Total current liabilities | 7,913 | 8,603 |
| Non-current liabilities | ||
| Borrowings | 5,468 | 4,702 |
| Other liabilities | 21 | 25 |
| Total non-current liabilities | 5,489 | 4,727 |
| TOTAL LIABILITIES | 13,402 | 13,330 |
| EQUITY | ||
| Share capital at par value | 7,159 | 7,159 |
| Share premium | 94 | 63 |
| Reserves | 1,182 | 1,182 |
| Retained earnings | 2,471 | 1,667 |
| Net profit (loss) for the period | -603 | 804 |
| Currency translation differences | -669 | -689 |
| TOTAL EQUITY | 9,634 | 10,186 |
| TOTAL LIABILITIES AND EQUITY | 23,036 | 23,516 |
Consolidated statement of comprehensive income
| Q1 2013 | Q1 2012 | |
| Revenue | 13,186 | 12,643 |
| Cost of goods sold | -6,424 | -6,188 |
| Gross profit | 6,762 | 6,455 |
| Distribution costs | -6,575 | -6,584 |
| Administrative and general expenses | -735 | -684 |
| Other operating income | 28 | 33 |
| Other operating expenses | -7 | -10 |
| Operating loss | -527 | -790 |
| Finance income | 17 | 107 |
| Finance costs | -93 | -342 |
| Loss before income tax | -603 | -1,025 |
| Income tax expense | 0 | -18 |
| Net loss | -603 | -1,043 |
| Loss attributable to: | ||
| Equity holders of the parent company | -603 | -1,044 |
| Non-controlling interest | 0 | 1 |
| Other comprehensive income | ||
| Currency translation differences | 20 | 78 |
| Total comprehensive loss | -583 | -965 |
| Comprehensive loss attributable to: | ||
| Equity holders of the parent company | -583 | -966 |
| Non-controlling interest | 0 | 1 |
| Basic earnings per share, EUR | -0,02 | -0,03 |
| Diluted earnings per share, EUR | -0,02 | -0,03 |
Maigi Pärnik
Member of the Management Board
maigi.parnik@baltikagroup.com
