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MQ CEO disappointed with outcome for H1 of 2010/2011
29
Mar '11
The MQ Holding AB announced Interim report September 2010 – February 2011.

Johan Elfner, CEO's statement

The second quarter of 2010/2011 was a disappointment for the Swedish fashion trade, and for MQ.We must, of course, look at the outcome on the basis of MQ's specific challenges and I can state that our change programs aimed at creating a more commercial and attractive product line have not moved sufficiently fast. This became evident especially during the Christmas season and the subsequent discount sales, which were more extensive and, thus, more costly than planned.

With the aim to sharpen our focus on the product line, we conducted an organisational change in February through which we split design and purchasing into two separate departments. We strengthened the design department with new competence and a new design director. The efforts of the strengthened design department are expected to yield results with effect as of the autumn collections. Work involved in raising the share of purchases via proprietary purchasing offices is progressing as scheduled and is helping us to offset rising production costs.

Needless to say, we are not satisfied with the outcome for MQ's first six months of 2010/2011. Sales rose 2.1 percent during the first six months, thanks to new stores, but showed – despite negative comparative figures – a slightly superior trend than that of the overall market, with MQ's sales in comparable units reporting a fall of 2.6 percent compared with the market decline of 2.8 percent. We moved on from the discount sales with a well-balanced inventory of autumn goods and at a lower level than a year earlier.

During the second quarter, MQ opened its second store in Norway, and both stores in the Norwegian market progressed positively. We have now established a small but stable platform in Norway from which we can expand. The objective for the coming twelve-month period is to raise growth in the Norwegian market and increase sales in the Group's existing stores, while simultaneously retaining tight cost control.

Our growth plans in Norway and Sweden thus remain in place, and the conditions for developing operations in the right direction have been bolstered with completion of organisational changes and a keener focus on the design process, along with tighter control of purchases. The recent ranking of MQ as one of Sweden's most attractive employers among business and economics students in a survey conducted by Universum, as well as its top ranking by theMarket magazine as the company offering the best service in the fashion sector, lends additional support to our continuing development.

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