Baltika Group reduces net loss by half in third quarter. Monton and Mosaic store will be opened in Serbia
Baltika Group ended the third quarter with a net loss of 296 thousand euros, over a half or 354 thousand euros less than in the same period last year. The Group’s sales revenue remained at the same level as the third quarter of 2015, with wholesale and franchise sales as well as the Andmorefashion.com e-store being the fastest growing sales channels, increasing 45% and 20%, respectively. In the first nine months of this year, Baltika Group achieved its best operating result of the past four years thanks to maintaining its sales revenue level, an improved gross margin and efficient cost control.
Baltika Group’s sales revenue in the third quarter of 2016 remained on the same level as that of the same period last year, amounting to nearly 12 million euros. Wholesale and franchise sales were the fastest growing sales channels with a growth rate of 45%, i.e. 2.1 million euros. Retail sales amounted to 9.5 million euros in the third quarter, having decreased by 7% from the same period last year.
“The results of the first nine months of the year confirm that the direction chosen by Baltika and the difficult decisions made last year were justified. Achieving growth in our home markets in the Baltic region is challenging, and so we have invested in wholesale and franchise sales in Central and Eastern Europe to support the Baltic retail markets,” said Meelis Milder, Chairman of the Management Board of Baltika Group, in response to the financial results for the first nine months of the year. As at the end of September, the Monton collection was retailing at 19 stores of Peek & Cloppenburg, a chain of high-quality clothing stores in Europe; as of November, the Monton collection will be available at 25 stores. Baltika also entered the Serbian market in the third quarter, concluding a franchise agreement with Victoria Elegans d.o.o. at the beginning of October. Victoria Elegans d.o.o. will open the first Monton and Mosaic brand store in the second largest Serbian city of Novi Sad at the beginning of 2017. By the end of the third quarter, the number of Baltika’s franchise outlets had grown to 33, amounting to 26% of the store portfolio.
The e-sales of the collections of Baltika’s fashion brands of Monton, Mosaic, Baltman, Ivo Nikkolo and Bastion grew by 20% in the third quarter, amounting to 249 thousand euros. The largest sales volumes again came from Estonia, Latvia, Lithuania, Russia and Finland.
The gross profit margin improved by 2.6 percentage points in the third quarter, from 49.1% to 51.7%. In addition to retail sales, the gross profit margin also increased in e-store sales as well as wholesale and franchise sales. “The improvement in the gross profit margin was mainly due to a more efficient management of discounts and the purchase price of goods. We have taken some decisive steps towards increasing efficiency and we shall continue on our chosen route,” added Meelis Milder. Distribution and overhead costs have decreased by 2% compared to the previous year.