Baltika Group 2009
Although in the summer of 2008 Baltika began preparing for its next four-year strategy cycle (2009-2012), in the present economic environment it is more reasonable to continue on a year-at-a-time basis.
The keywords for 2009 will be adjustment and preparing for a new rise. In terms of half-years or seasons, this will mean that 2009/1 will be a season of determining new sales levels and corresponding sales and management expense and inventory levels. Since many of the preliminary plans for 2009/1 that were made in autumn 2008 have had to be significantly revised (for example, the initial sales plan has been reduced by approximately 20% and expenditures on new stores have been cut more than two-fold), the main targets will be lowering inventory levels, raising financing for purchases and reducing operating expenses in the light of the new sales forecast. The cost cutting programme foresees a more than 60-million kroon (3.8-million euro) cut in both management and operating expenses during the season. All business processes will be streamlined. Opening of new stores will continue at a smaller scale (14 openings have been planned). By the end of the season, the Group will have 137 stores and will be operating retail space of 29,000 square metres.
According to action plans, by 2009/2 the Group will have adjusted and its operation should be ordinary. No investments will be made in the growth of the retail system and operating expenses and inventory levels will correspond to sales levels that are lower than before. The target will be reinforcing the Group’s market positions by well-balanced collections, proactive sales offerings and a dedicated sales process.
As preparation of accurate long-term sales plans is currently extremely complicated, Baltika forecasts for 2009 revenue of 1,083-1,125 million kroons (69-72 million euros) including 990-1,020 million kroons (63-65 million euros) generated by the retail business and 90-100 million kroons (5.8-6.4 million euros) generated by the wholesale business. Until the end of 2009, the number of stores and the sales area should remain at the level of 2009/1.
As a single non-recurring project, in May 2009 a new office building will be completed as part of phase I of the Baltika Quarter. The new building and the old office building that will be vacated after Baltika’s relocation to new premises will have more than 11,000 square metres of office and trading space that can be let. The anchor tenant of the new building will be Baltika Group with its head office and brand stores (over 5,500 square metres). Expenditures on phase I of the Baltika Quarter will total around 145 million kroons (9.3 million euros).