Baltika’s third quarter financial results were shaped by rearrangement of the wholesale and franchise operating model
Baltika Group ended the third quarter with a loss of 814 thousand euros. The result for the same period last year was a loss of 471 thousand euros. In the third quarter, Group’s revenue decreased 8% compared to same period last year and the reason was decrease in wholesale and franchise sale by 45%. The biggest sales segment – retail revenue remained at the level of same period last year and e-store sales increased 20%.
Wholesale and franchise revenue was 1,212 thousand euros in the third quarter, which is less by nearly million euros, compared to third quarter last year. Export director Raivo Videvik explains the reasons: “Baltika is currently rearranging the operating model for export markets in compliance with Group’s 2022 Strategy, so the decline in sales volumes was predictable. But the decline has been considerably faster than planned. ”
The biggest decline in sales volume is attributable to the changes in cooperation with Peek & Cloppenburg, one of the leading department store chain in Germany and Central Europe, according to which Monton collections are no longer sold in most department stores in Germany. Changes were made in accordance with reseller’s new strategy and selection of brands offered in department store chain’s home market. “Baltika will continue co-operation with Peek & Cloppenburg in Central and Eastern European region, where five new sales areas will be added this year-end, and that’s already in different form,” Videvik confirmed continuation of the partnership. Another substantial reason for the decline in franchise sales are still difficult economic situation in Ukraine, decreased purchase power of local population there and long-time weakening of the Ukrainian hryvnia.
Baltika’s fashion brand Monton successfully continues to expand in Balkan region. In third quarter, three new selling points were opened on retail spaces belonging to the partner Montecristo SL d.o.o, in Slovenia and Croatia. Preparations are in order to open two more sales areas in Novi-Sad, Serbia in the fourth quarter.