The fourth quarter 7% retail revenue growth was achieved on a sales area that was 11% smaller on average. The company also improved its efficiency: sales efficiency improved by 21% and comparable store sales by 14%.
Baltika Group ended the fourth quarter of 2010 with revenue of 15.1 million euros, a 7% increase year-over-year. Retail revenues totalled 14.3 million euros, also 7% up year-over-year. Sales grew in all markets except Lithuania that posted a 5% sales decline. The largest, 18%, sales growth was achieved in Latvia. In Estonia sales grew by 14%, in Russia by 9%, in Ukraine by 7% and in Poland by 3%.
Baltika Group improved its efficiency in all markets. Sales per square metre (sales efficiency) rose by 21%. Comparable store sales grew by a total of 14% and results improved in all markets: in Russia by 25%, in Ukraine by 20%, in Estonia by 13%, in Latvia by 12%, in Lithuania by 6% and in Poland by 4%. In the fourth quarter the Group opened one and closed four stores.
Baltika ended the fourth quarter with a gross profit of 8.3 million euros earned on a sales area that was 11% smaller on average and a significantly higher gross margin. Fourth quarter gross margin was 55% (2009: 51%) and gross profit for the quarter was 15% 1.1 million euros larger than in the comparative period.
The retail system ended the fourth quarter with a profit of 1.8 million euros, an improvement of 0.6 million euros year-over-year. Excluding the impact of the Czech market that was exited in 2009, comparable profit was 1.9 million euros, i.e. 0.61 million euros larger than in the comparative period.
In the fourth quarter the Group’s management adopted a number of decisions aimed at achieving the strategic objectives of subsequent years. To restore the retail system’s efficiency to its pre-crisis level and sustain its profitable growth, the Group will continue restructuring the existing system. It was decided that in the first half of 2011 five additional stores would be closed. Four of them were closed in the first two months of 2011. In addition, in the next six months management will decide the possibilities and need for continuing operations in the Polish market. The effects of all those activities were provided for in the fourth quarter and are reflected in the fourth quarter results.
The Group’s fourth quarter operating profit from the core operations amounted to 0.6 million euros. For comparison, in the fourth quarter of 2009 the Group incurred a loss of 1.6 million euros. After all the provisions made in 2010 for 2011 the quarter ended in a loss of 1.3 million euros (Q4 2009: -2.2 million euros). Fourth quarter earnings before interest, tax, depreciation and amortisation (EBITDA) were 0.7 million euros compared with -1.91 million euros for the fourth quarter of 2009.