Baltika Group sales increased by 2% in 1st quarter
In the first quarter of this year, Baltika Group achieved a 2% increase in the sales revenue of its fashion brands, with total sales in Europe, Russia and the e-shop Andmorefashion.com amounting to almost EUR 10.8 million. Among retail markets, the Estonian market grew the most, achieving 4% sales growth, and Baltika Group’s e-shop Andmorefashion.com also improved its sales results by 38%. The first quarter closed with a net loss of EUR 590,000.
In the first quarter of 2017, Baltika Group’s sales revenue grew by 2% compared to the same period in the previous year, amounting to EUR 10 757 thousand. Retail sales were EUR 8 524 thousand, having grown by 1% compared to the same period in 2016, with the Estonian retail market growing the most – by 4%. “Increasing sales revenue is an important goal for Baltika Group and we managed to achieve that goal in the first quarter of this year. In our home markets of Estonia, Latvia and Lithuania, we aim to maintain our position among the TOP5 fashion industry companies and generate a stable result, while expecting our wholesale and franchise partners to drive growth in our sales revenue – the results of the previous year as well as the first quarter of this year confirm that the changes undertaken in the business model and processes were justified,” said Meelis Milder, the Chairman of the Management Board of Baltika Group.
During the first quarter, two new brand stores were opened in Baltika Group’s home markets – a new Monton brand store at the Viru Centre and a Monton AndMore store at the prestigious Galleria Riga shopping centre in the heart of Riga. The Chairman of the Management Board of Baltika Group, Meelis Milder, explained that the current environment is turbulent and pivotal for the retail market. “Various fashion industry and retail trends have a considerable impact on companies operating in this sector. Consumption patterns are changing, with people buying increasingly more products with no seasonal attributes in the classical sense. In consumers’ choices, other products and services are increasingly competing with fashion products,” Milder added.
The sales revenue in wholesale and franchise sales amounted to EUR 1 845 thousand in the first quarter, having increased by 3%. The sales growth was supported by increased sales volumes in the prominent Central European department store chain Peek & Cloppenburg and entry into a new franchise market in Serbia. A Monton AndMore brand store based on Baltika’s new concept was opened in Novi Sad in Serbia on 8 March. The new concept was created with the aim of improving competitiveness in international markets and increasing the design export of Baltika Group. The franchise stores representing the Baltika brands make up 26% of the store portfolio. The export of Estonian design to foreign markets formed more than half of Baltika’s sales revenue, at 57.7%.
Baltika Group’s e-shop sales revenue grew by 38% in the first quarter, to EUR 349,000. In total, Baltika fashion brand products were ordered from 31 countries, with the largest sales volumes coming from Estonia, Latvia, Lithuania, Russia and Finland. According to Meelis Milder, the fashion business and commerce sector are influenced by tightening competition and the multitude of segments, in addition to the rapid growth of e-commerce. “We see an even further tightening of competition in the fast fashion segment, while new and rapidly developing niches will appear, which by and large means a partial return to the so-called old values (sustainability and quality of products, transparency of the supply chain, ‘slow fashion’).
The company ended the first quarter with a net loss of EUR 590,000. “Due to the seasonal nature of the fashion industry, the first quarter of a year has always been challenging for us. The sales revenue achieved in the first quarter this year was partly a result of extensive discounts. That, in turn, caused the gross profit to decrease and the loss to increase compared to the first quarter of the previous year,” Meelis Milder commented.
Due to the increased sales premises of the retail markets, marketing costs grew by 1% in the first quarter, while the overhead costs decreased by 2%. In conclusion, the ratio of marketing and management costs to sales revenue was 53.2% in the first quarter, i.e. the ratio of costs to sales revenue decreased by 0.8 percentage points over the year.