Published: 2018-04-19 16:06:38 CEST
Quarterly report

Baltika’s unaudited financial results, first quarter of 2018

Baltika Group ended the first quarter with a net loss of 982 thousand euros. The result for the same period last year was a net loss of 590 thousand euros.

In the first quarter the Group’s revenue decreased 4% compared to same period last year and was 10,343 thousand euros. Retail and wholesale decreased, but e-store continued to show strong growth increasing 35% compared to the first quarter of last year.

Retail revenue in the first quarter was 8,137 thousand euros, decreasing 5% compared to same period last year. Good sales in January were followed by February, where sales results were the worst ever, caused mainly by a significant drop in the number of visitors, especially in the Lithuanian market. In March, different sales campaigns brought visitors back to stores and the sales trend recovered.

Wholesale and franchise revenue decreased 8% compared to the first quarter last year and was 1,702 thousand euros. The main reasons for the decline in the first quarter’s sales were decreased franchise sales in Russia, Ukraine and Belarus. While franchise sales decreased, the sales to wholesale partners increased in the first quarter by 7%. The biggest brand in wholesale and franchise was Monton with a 55% share of sales. At the end of the first quarter there were 31 franchise stores representing Baltika’s brands, forming 25% of the total stores portfolio. The plan, to grow sales outside the Baltics, is under development, the results of which should realise in nearest years.

Baltika Group’s e-store revenue increased 35% in the first quarter compared to same period last year and was 470 thousand euros. Monton is still the most popular brand, comprising 35% of the e-store revenue. Sales were highest in Estonia with share of 57% from e-store total sales, followed by Latvia 18% and Lithuania 14%. Sales growth was supported by the expansion of Click&Collect network in Baltics and opening Click&Collect service in Finland in Iso Omena store, and also by improvements made to the e‑store user-friendliness, especially in check-out process. In the first quarter, 9,946 orders from 30 counties were received.

The company’s gross profit margin in the first quarter was 47.2%, which is 1.6 percentage points lower than the margin in the first quarter of last year. Gross profit margin was impacted by strongly decreased sales in February and sales campaigns in March. The gross profit for the quarter was 4,883 thousand euros, which is 367 thousand euros and 7% smaller in relation to last year’s comparable result.

Due to the 6% increase in sales area the Group’s distribution expense increased by 1%, while general expense decreased, resulting Group’s distribution and general expense in total to remain at the last year’s first quarter level. The distribution and general expense to revenue ratio in the first quarter was 55.3%, increasing by 2.1 percentage points due to decrease of sales volume.

Highlights of the period until the date of release of this quarterly report

  • In February, after the opening ceremony of the Pyeongchang Winter Olympics, Monton’s collection created for Olympics received recognition from many of the world media publications and the outfit of the Estonian Olympic Delegation was named as one of the best in Pyeongchang.
  • On 22nd of March 2018 the Supervisory Board of AS Baltika decided to propose to the general Meeting of shareholders, to decrease the share capital. The share capital shall be decreased to cover prior period losses in a simplified way. Share capital will be reduced by 4,079,850 euros. Share capital is reduced by way of reduction of the nominal value of each share by 0.10 euros. The new amount of the capital of the Company after the reduction of share capital and reduction of nominal value of the shares will be 4,079,850 euros, which is divided into 40,794,850 shares with the nominal value of 0.10 euros.
  • On 22nd of March 2018 the Supervisory Board of AS Baltika decided to propose to the general meeting of shareholders to approve managers share option program and conditional increase of the share capital by issuing up to 1,000,000 additional shares. The share options can be exercised in the years 2021-2022.
  • In March, a jury, consisting of fashion and design experts, nominated Hanna Haring, the Head Designer of Monton, for the most prestigious fashion award in Estonia – the Golden Needle (Kuldnõel). The winner will be announced at the Golden Needle Gala in October in the framework of Tallinn Fashion Week.
  • In March, Monton debuted its colourful and lemur inspired #nofilter collection at Tallinn Fashion Week. With its collection, Monton encourages people to find inspiration in the unusual and bring forth their true self.
  • In the first quarter, Baltika closed two stores in its retail system in Estonia and opened one store in Latvia and one store in Lithuania. Two franchise stores were closed – one in Ukraine and one in Tenerife, Spain.

Consolidated statement of financial position

  31 Mar 2018 31 Dec 2017
Current assets   
Cash and cash equivalents 485 704
Trade and other receivables 2 908 2 055
Inventories 10 127 10 499
Total current assets 13 520 13 258
Non-current assets   
Deferred income tax asset 189 189
Other non-current assets 503 487
Property, plant and equipment 2 200 2 395
Intangible assets 1 506 1 513
Total non-current assets 4 398 4 584
TOTAL ASSETS 17 918 17 842
Current liabilities   
Borrowings 3 190 1 309
Trade and other payables 5 207 5 984
Total current liabilities 8 397 7 293
Non-current liabilities   
Borrowings 5 317 5 363
Total non-current liabilities 5 317 5 363
Share capital at par value 8 159 8 159
Share premium 496 496
Reserves 1 345 1 345
Retained earnings -4 814 -4 872
Net profit (loss) for the period -982 58
TOTAL EQUITY 4 204 5 186

Consolidated statement of profit and loss and comprehensive income

  1Q 2018 1Q 2017
Revenue 10 343 10 757
Client bonus provision 0 0
Revenue after client bonus provision 10 343 10 757
Cost of goods sold -5 460 -5 507
Gross profit 4 883 5 250
Distribution costs -5 127 -5 059
Administrative and general expenses -595 -659
Other operating income (-expense) -17 -2
Operating profit (loss) -856 -470
Finance costs -126 -120
Profit (loss) before income tax -982 -590
Income tax expense 0 0
Net profit (loss) for the period -982 -590
Total comprehensive income (loss) for the period -982 -590
Basic earnings per share from net loss for the period, EUR -0,02 -0,01
Diluted earnings per share from net loss for the period, EUR -0,02 -0,01

Maigi Pärnik-Pernik

Member of the Management Board