Baltic clothing retailer sees a decline in its turnover
The consolidated revenue of Apranga Group amounted LTL 127.9 million (EUR 37.1 million) in six months of 2010, and decreased 15.1% comparing to the same period last year.
The unaudited consolidated profit before income tax of Apranga Group has made LTL 0.8 million (EUR 0.23 million) during the six months of 2010, while Apranga Group has suffered the loss of LTL 13.2 million (EUR 3.8 million) in the same period of 2009.
The retail turnover (including VAT) of the Group's chain was LTL 161.5 million in the six months of 2010, and has decreased by 13.9% comparing to corresponding period of 2009. The drop in sales reflects the general situation in Baltic States, where, according to EUROSTAT, the decrease of retail trade was about 10-15% during the first half 2010.
During the first half of 2010 mostly decreased the turnover of economy and business wear chains. This was mainly due to respectively by 18% and 40% decreased stores area of economy and business wear chains. During the six months of 2010 the Group opened 11 and closed 4 stores.
The main part of 11 newly opened stores consists of 8 PROMOD chain stores, which Group has taken over from the Latvian company Fashion Retail SIA at the end of 2nd quarter 2010. The total sales area operated by the Group has decreased by 7.5% or by 5.3 thousand sq. m. during the period from 30 June 2009 till 30 June 2010. The capital expenditure of the retail chain expansion (including the takeover of PROMOD chain) amounted to LTL 3.4 million during 1st half 2010.
The number of stores owned by the Group decreased slightly comparing to the same period a year ago. Just the number of outlets increased a bit more significantly. This is done to optimize seasonal inventory balances. The spread of youth chain stores was mainly influenced by 8 PROMOD brand stores opening at the end of second quarter 2010.
The Group has earned LTL 805 thousand of profit before income tax in six months 2010, while losses before taxes were even LTL 13 249 thousand during six months of 2009. EBITDA was LTL 11 289 thousand during half year 2010, and it was minus LTL 178 thousand in corresponding previous year period.
Substantial improvement was resulted by:
• the closure of 13 most ineffective stores during 2nd half 2009 and 1st quarter 2010;
• the reduction of inventories by 33% during the year;
• the reduction of operating expenses by 23%, including remuneration expenses less by 30%;
• the gross profitability increased from 38.7% to 43.5%.
Despite the fact that consumption in Baltic countries is still falling, and the market of retail sales of clothes remains uncertain, Group is planning profitable business both in III quarter 2010, and in IV quarter 2010. It is expected that the turnover of retail chain will decrease no more than 5% during the II half 2010, comparing to the turnover of the II half 2009.
There are no plans foressential reforms in stores chain managed by the Group. Individual stores will be renovated or moved to other premises. As the result of successful inventory optimisation the number of outlets will be reduced. The Group will further continue concentrate its efforts to greater efficiency of the stores, to improve service standards, will continue to pursue cost-saving measures.
Apranga Group is a distinct leader of clothing retail in the Baltic States. Group increased retail clothing market share up to 35% in the local Lithuanian market. At the beginning of 2003, the company started its activity in Latvia. In 2004 company expanded to Estonia. Currently, the Group operates a chain of 116 stores in the Baltic States: 75 – in Lithuania, 31 – in Latvia, and 10 – in Estonia.