With the support of sales increase by 7% and efficiency increase by 16% Baltika decreased its first quarter loss by 56%. Result better than forecasted confirm achieving the planned financial target for 2012, which is an EBITDA of 3 million euros.
„Increasing sales and efficiency supported us to achieve better first quarter result than we had forecasted – we managed to decrease loss by two times. Owing to the seasonal nature of the retail market, the first quarter is the weakest for Baltika and over achieving our result here confirms our 2012 target which is an EBITDA of 3 million euros. Continued cost control, increasing efficiency and stable financial position support achieving the target,” said Meelis Milder, Chairman of Management Board of Baltika.
In the first quarter, Baltika started with concession, Baltika Quarter sales process and opened Monton e-store. „With the purpose of improving the stores’ sales efficiency and offering wider product range, we are selling under a concession agreement German lifestyle brand Stones in eight of our Baltic stores. In co-operation with Catella Corporate Finance we have started sales process of Baltika Quarter that is in line with our planned time schedule and we have received offers from several potential buyers. In February we opened Monton e-store, by which the Monton collection has been dispatched to more than 15 European countries,” added Meelis Milder.
Although the average retail sales area was 8% smaller, Baltika’s first quarter sales increased by 7% year over year and sales efficiency improved by 16%. The sales increase in most of the company´s markets: Latvia 27%, Estonia 18%, Lithuania 9% and Ukraine 6%. Sales decrease by 4% in Russia is caused by 8% decrease in the market´s sales area. Sales efficiency increased in all markets: Latvia 26%, Estonia 20%, Russia 16%, Lithuania 11% and Ukraine 2%. All Baltika brands showed sales and sales efficiency increase, the biggest sales increase was achieved by Baltman and the biggest efficiency increase by Monton and Mosaic.
The restructuring of retail network was finalised with closing last seven stores in the first quarter, on March 31st Baltika had 108 stores. The restructuring of retail network helped to decrease distribution expenses by 6% and distribution costs ratio to net sales has improved by 8 percentage points (52% compared to 60% in 2011). Administrative and general expenses decreased by 8%, operating expenses by 6% and ratio to net sales has improved by 9 percentage points compared to first quarter of 2011. The net loss in first quarter of 2012 amounted to 1,043 thousand euros that is 1,321 thousand euros, i.e. 56% better result than a year ago.
Batika Group (www.baltikagroup.com) is a fashion retailer operating four retail concepts: Monton, Mosaic, Baltman and Ivo Nikkolo. Group brands are represented in Eastern and Central Europe. Baltika employs a vertically integrated business model which means that the Group controls all stages of the fashion process: design, manufacturing, supply chain management, distribution/logistics and retail sales. On March 31 2012 the Group had 109 stores in five markets: Estonia, Latvia, Lithuania, Russia and Ukraine.