Baltika Group’s third quarter resulted in net loss in the amount of 296 thousand euros, which is an increase of 354 thousand euros compared to the same period last year. The result of the same period last year was a loss of 650 thousand euros and the comparative figure for continued operations was a loss of 520 thousand euros.
In connection with Baltika Group’s exit from the Russian retail business, which represented a major line of business of the Group, the 2015 results of the Russian companies’ retail operations are presented as a discontinued operation.
In the third quarter Baltika’s revenue from continued operations stayed close to last year’s level and was 11,966 thousand euros. The largest revenue growth of 45% was in wholesale and franchise, totalling 2,141 thousand euros. Revenue increased mainly due to the Russian retail market’s transition over to the franchise partner and Monton women’s collection’s entrance to the German department store chain Peek & Cloppenburg. As at the end of September the Monton collection was sold in 19 Peek & Cloppenburg department stores in Europe, from November the number of Monton collection selling department stores will be 25. At the beginning of October Baltika signed a franchise agreement with Serbian enterprise Victoria Elegans d.o.o., who will open the first Monton and Mosaic brand store in Novi Sad Serbia at the beginning of 2017. At the end of the third quarter there were 33 franchise stores, forming 26% of the total stores portfolio.
E-store andmorefashion.com revenue increased 20% in the third quarter and was 249 thousand euros. Countries with the largest sales were Estonia, Latvia, Lithuania, Russia and Finland.
Retail revenue decreased by 7% compared to same period last year and was 9,547 thousand euros. At the same time the retail gross profit margin has increased 2.6 percentage points from 49.1% to 51.7% due to a more effective intake margin management process and lower mark-downs. E-com and wholesale and franchise gross profit margin has increased as well.
Gross profit was 5,432 thousand euros in the third quarter, which is 81 thousand euros higher than in the same period last year.
Baltika’s total revenue in the first three quarters of 2016 was 34,289 thousand euros, which is 3% less than in the same period last year. Baltika ended the first nine months with net loss in the amount of 443 thousand euros. The result of the same period last year was a net loss in the amount of 1,719 thousand euros and the comparative figure for continued operations was a net loss in the amount of 1,176 thousand euros. In addition to exiting from the Ukrainian and Russian retail markets and more effective gross profit margin management the results have improved due to costs control as well. Distribution, administrative and general expenses have decreased 2% compared to last year.
Highlights of the period until the date of release of this quarterly report
- On 27th of July 2016 AS Swedbank and AS Baltika signed an agreement amendment according to which Baltika will get an investment loan in the amount of 2 million euros during a one-year period with a repayment period of 4 years. The amendment also contains a 20 month extension for the repayment of the existing loan in the amount of 1 million euros. The Loan interest margin remained unchanged.
- On 24th of August 2016 Baltika Group presented its fashion brands autumn/winter collection in the No99 theatre. For the first time in the history of the fashion show, it was broadcasted in all Baltika Group’s home markets – Estonia, Latvia and Lithuania via Delfi.
- On 21st-25th of September 2016 a delegation of 22 Estonian design brands, including three of Baltka’s fashion brands – Baltman, Ivo Nikkolo and Monton, participated in the Washington DC Fashion Week. The aim of taking Estonian fashion and design to Washington was to introduce strong Estonian brands in the US, to create long-lasting cooperation opportunities and to develop e-commerce of the sector.
- In the third quarter two new Monton franchise stores were opened in Ukraine and five low profit franchise stores were closed, three in Spain and one in both Ukraine and Russia.
- At the beginning of October Baltika signed a franchise agreement with Serbian enterprise Victoria Elegans d.o.o., who will open the first Monton and Mosaic brand store in Novi Sad, Serbia at the beginning of 2017.
Consolidated statement of financial position
| 30 Sept 2016 | 31 Dec 2015 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 226 | 398 |
| Trade and other receivables | 2,678 | 1,607 |
| Inventories | 11,271 | 10,424 |
| Total current assets | 14,175 | 12,429 |
| Non-current assets | ||
| Deferred income tax asset | 234 | 234 |
| Other non-current assets | 418 | 584 |
| Property, plant and equipment | 3,093 | 2,910 |
| Intangible assets | 1,732 | 1,944 |
| Total non-current assets | 5,477 | 5,672 |
| TOTAL ASSETS | 19,652 | 18,101 |
| EQUITY AND LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 7,498 | 3,009 |
| Trade and other payables | 6,303 | 6,709 |
| Total current liabilities | 13,801 | 9,718 |
| Non-current liabilities | ||
| Borrowings | 1,506 | 3,312 |
| Other liabilities | 0 | 283 |
| Total non-current liabilities | 1,506 | 3,595 |
| TOTAL LIABILITIES | 15,307 | 13,313 |
| EQUITY | ||
| Share capital at par value | 8,159 | 8,159 |
| Share premium | 496 | 496 |
| Reserves | 1,182 | 1,182 |
| Retained earnings | -5,049 | 1,310 |
| Net loss for the period | -443 | -6,359 |
| TOTAL EQUITY | 4,345 | 4,788 |
| TOTAL LIABILITIES AND EQUITY | 19,652 | 18,101 |
Consolidated statement of profit and loss
| 3 Q 2016 | 3 Q 2015 | 9M 2016 | 9M 2015 | |
| Continuing operations | ||||
| Revenue | 11,966 | 12,002 | 34,289 | 35,301 |
| Cost of goods sold | -6,534 | -6,651 | -17,367 | -18,701 |
| Gross profit | 5,432 | 5,351 | 16,922 | 16,600 |
| Distribution costs | -4,985 | -5,172 | -15,094 | -15,455 |
| Administrative and general expenses | -605 | -577 | -1,874 | -1,920 |
| Other operating income (-expense) | -14 | 0 | -51 | -40 |
| Operating loss | -172 | -398 | -97 | -815 |
| Finance costs | -124 | -122 | -346 | -361 |
| Loss before income tax | -296 | -520 | -443 | -1,176 |
| Income tax expense | 0 | 0 | 0 | 0 |
| Net loss from continuing operations | -296 | -520 | -443 | -1,176 |
| Net loss for the period from discontinued operations | 0 | -130 | 0 | -543 |
| Net loss for the period | -296 | -650 | -443 | -1,719 |
| Basic earnings per share from net loss for the period, EUR | -0.01 | -0.01 | -0.01 | -0.04 |
| From continuing operations | -0.01 | -0.01 | -0.01 | -0.03 |
| From discontinued operations | - | 0.00 | - | -0.01 |
| Diluted earnings per share from net loss for the period, EUR | -0.01 | -0.01 | -0.01 | -0.04 |
| From continuing operations | -0.01 | -0.01 | -0.01 | -0.03 |
| From discontinued operations | - | 0.00 | - | -0.01 |
Maigi Pärnik-Pernik Member of the Management Board maigi.parnik@baltikagroup.com
