Baltika Group’s first quarter resulted in net loss in the amount of 590 thousand euros. The result of last year first quarter was net loss of 493 thousand euros.
Group’s 2017 first quarter revenue increased by 2% compared to the same period last year and was 10,575 thousand euros. Retail revenue was 8,524 thousand euros, increasing 1% compared to same period last year, the highest retail sales growth with 4% was in Estonia.
Wholesale and franchise revenue in first quarter was 1,845 thousand euros, increase of 3%. Growth in sales revenue was supported by higher sales volumes to Peek & Cloppenburg department stores chain and entrance to new franchise market in Serbia: on 8th of March Baltika’s brands representing store Monton AndMore was opened in Novi Sad, Serbia. At the end of first quarter there were 33 Baltika’s brands representing franchise stores, forming 26% of total stores portfolio.
Baltika Group’s e-store Andmorefashion.com sales revenue increased 38% and was 349 thousand euros. In total orders were placed from 31 countries. Countries with the largest sales are Estonia, Latvia, Lithuania, Russia and Finland. The best-selling brands in e-store were Monton and Ivo Nikkolo.
The company’s gross profit margin in the first quarter was 48.8%, which is 1.8 percentage points lower than the 50.6% margin in the same period last year. Retail gross profit margin was mainly impacted by winter products over-supply in Baltics retail markets and thus higher mark-downs which in addition competed with the full prize new season products sales. In addition the first quarter gross profit margin was impacted by changing sales campaign beginning to March (in previous year sales campaign started in April). The first quarter gross profit was 5,250 thousand euros, decreasing 1% i.e. 61 thousand euros compared to last year.
Due to increased Baltics retail market sales area the distribution expense in the first quarter increased 1%, at the same time general expense decreased 2%. The distribution and general expense ratio to revenue in the quarter was 53.2% i.e. within year the costs ratio to revenue has decreased by 0.8 percentage points.
One of the company’s objectives for 2017 was the revenue growth in all of the sales channels, which in first quarter was met. At the same time the increase of retail revenue came partly from deeper mark-downs, which decreased gross profit and thus the company ended the first quarter with 97 thousand euros bigger net loss than in previous year.
Highlights of the period until the date of release of this quarterly report
- On 7th of March 2017 Monton, Mosaic, Ivo Nikkolo, Baltman and Bastion presented their 2017 spring-summer collection in Hansaplant gardening centre. Fashion show was also broadcasted via Baltika’s e-store Andmorefashion.com.
- On 8th of March 2017 first Baltika’s fashion brands representing store in Serbia was opened in Novi Sad in cooperation with Serbian franchise partner Victoria Elegans d.o.o.
- On 17th of March 2017 Monton, who is celebrating its 15th anniversary this year, presented within the Tallinn Fashion Week a special collection inspired by the magic of opposites, of which the majority of items are handmade.
- On 22nd of March 2017 the Supervisory Board decided to propose to the Annual General Meeting of shareholders, to issue new convertible bonds with bondholder option in the total amount of 4.5 million euros. The proposal is to issue 900 convertible bonds with the issuance price of 5,000 euros. Bonds shall be subscribed during the time period starting from 14 July and ending 16 August 2017. Bonds carry an annual interest rate of 6.0% and will give its owner the right to subscribe 15,625 shares of the AS Baltika with the subscription price of 0.32 euros. The aim of the bond issuance is to refinance the bonds issued in 2014.
- At the end of March Monton store with new concept was opened in Tallinn Viru Keskus shopping centre. As at the end of the quarter Group had 128 stores among which 95 stores belong to Baltika’s own retail network.
Consolidated statement of financial position
| 31 Mar 2017 | 31 Dec 2016 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 605 | 419 |
| Trade and other receivables | 2,424 | 1,956 |
| Inventories | 11,090 | 11,096 |
| Total current assets | 14,119 | 13,471 |
| Non-current assets | ||
| Deferred income tax asset | 228 | 228 |
| Other non-current assets | 522 | 522 |
| Property, plant and equipment | 2,901 | 3,022 |
| Intangible assets | 1,633 | 1,676 |
| Total non-current assets | 5,284 | 5,448 |
| TOTAL ASSETS | 19,403 | 18,919 |
| EQUITY AND LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 7,896 | 5,835 |
| Trade and other payables | 6,155 | 6,923 |
| Total current liabilities | 14,051 | 12,758 |
| Non-current liabilities | ||
| Borrowings | 977 | 1,196 |
| Total non-current liabilities | 977 | 1,196 |
| TOTAL LIABILITIES | 15,028 | 13,954 |
| EQUITY | ||
| Share capital at par value | 8,159 | 8,159 |
| Share premium | 496 | 496 |
| Reserves | 1,182 | 1,182 |
| Retained earnings | -4,872 | -5,049 |
| Net profit (loss) for the period | -590 | 177 |
| TOTAL EQUITY | 4,375 | 4,965 |
| TOTAL LIABILITIES AND EQUITY | 19,403 | 18,919 |
Consolidated statement of profit and loss
| 1 Q 2017 | 1 Q 2016 | |
| Revenue | 10,757 | 10,505 |
| Cost of goods sold | -5,507 | -5,194 |
| Gross profit | 5,250 | 5,311 |
| Distribution costs | -5,059 | -5,001 |
| Administrative and general expenses | -659 | -669 |
| Other operating income (expenses) | -2 | -25 |
| Operating loss | -470 | -384 |
| Finance costs | -120 | -109 |
| Loss before income tax | -590 | -493 |
| Income tax expense | 0 | 0 |
| Net loss for the period | -590 | -493 |
| Basic earnings per share from net profit (loss) for the period, EUR | -0.01 | -0.01 |
| Diluted earnings per share from net profit (loss) for the period, EUR | -0.01 | -0.01 |
Maigi Pärnik-Pernik
Member of the Management Board
maigi.parnik@baltikagroup.com
