MQ Holding AB Interim report

Transcription

1 MQ Holding AB Interim report Sharp increase in earnings during the quarter MQ s action programme to harness the potential that exists in the company is starting to generate effects. The actions, which entail both accelerating and applying the brakes, shaped activities during the first quarter, in which earnings were significantly higher than in the year-earlier period. First quarter (September 2013-November 2013) Net sales totalled SEK 372 million (364), up 2.2 percent. Sales in comparable stores increased 0.1 percent (according to the Swedish Retail Institute Index, the market shrank 1.6 percent.) The gross margin was 60.1 percent (60.5). Operating profit was SEK 35 million (21), equal to an operating margin of 9.4 percent (5.8). Profit after tax amounted to SEK 25 million (13), corresponding to SEK 0.72 (0.38) per share after dilution. Cash flow from operating activities was SEK 6 million (negative: 5). Events during the first quarter A comprehensive seven-stage action programme which entails both accelerating and applying the brakes has been formulated with a focus on sales-promotion and cost-saving measures, including measures to cut costs by SEK 50 million during the 2013/2014 financial year. The Helsingborg City store was reopened. Reduced retail space and improved accessibility on the ground floor have boosted sales and resulted in sharply increased sales per square metre. Shop online in the store whereby customers are given an opportunity to shop comfortably via MQ s Shop Online was introduced. Events after the end of the reporting period MQ has been nominated as Sweden s best e-shopping website by Internet World. 1

2 Key figures INTERIM REPORT SEPTEMBER-NOVEMBER 2013 MQ HOLDING MQ HOLDING AB (Corp. AB Reg. (Corp. No ) SEK m 13/14 12/13 Rolling 12 Months Dec 12-Nov13 Financial year Sept-Aug 12/13 Net sales ,470 1,463 Gross margin, % Operating profit Operating margin, % Profit after financial items Profit for the period Earnings per share before dilution, SEK Earnings per share after dilution, SEK Number of stores, end of the period

3 MQ HOLDING MQ HOLDING AB (Corp. AB Reg. (Corp. No ) Comments by the CEO Earnings improved sharply and MQ captured market share in a weak market. This is a gratifying result but looking at MQ s potential, there is much more to do to reach a position as the self-evident and geographically most diverse destination for branded products. To sum up, MQ experienced a strong quarter as the first step along its journey of change. In October, MQ launched a forceful seven-stage action programme. All stages have been introduced. The savings programme, which comprises SEK 50 million during the financial year, is delivering results as planned. The reorganisation and downsizing of the head office have been implemented. The new organisation for developing MQ s unique fashion position is now ready. The Swedish retail sector is under a process of constant change. We are reviewing retail space and developing the stores in order to increase sales per square metre. One example is the MQ City store in Helsingborg, which was reopened during the quarter. Reduced retail space but improved accessibility on the ground floor has been combined with a fashion store at the cutting edge of design. This has generated the expected effects with increased sales, resulting in a sharp rise in sales per square metre. Reviews designed to optimise every aspect of store operation are conducted on an ongoing basis. The pressure for accessibility is increasing as new consumption patterns emerge combined with a sharp rise in e- shopping. Accordingly, MQ s multichannel strategy is being taken all the way by also having e-shopping as a part of the store. Since the concept has been tested successfully in both smaller and larger cities, the roll-out continues. The launch of Shop Online in stores is making MQ an even stronger multichannel player. MQ s test of integrated e- shopping has attracted international attention, as a way of meeting the new market conditions in the retail sector. Intense work to enhance the offering of both proprietary and external brands is under way. By strengthening the customer offering, in which the product range is the core, MQ is moving towards a role as a self-evident fashion authority. The product range represents the key to MQ s turnaround. As of January, I will assume the role of Acting Product Range Manager. I have good experience from the companies that I have previously work at as both CEO and Product Range Manager and, from my viewpoint, I can see that developing the work done on MQ s product range offers great potential. The results of the first quarter of 2013/2014 show that we re on the right track earnings improved sharply. At the same time, we are aware that the journey has only just begun. Christina Ståhl President and CEO, MQ Holding AB 3

4 Operations The MQ Group is a retailer of women s and men s fashion in the Swedish and Norwegian markets. The range, which focuses on fashion-conscious consumers, contains a mix of proprietary and external brands. Store network The stores are located throughout Sweden from Ystad in the south to Luleå in the north. MQ was launched in Norway in September 2010 and currently has five stores located in Oslo, Jessheim, Drammen and Kristiansand. All stores sell both women s and men s fashions. At the end of the period, the total number of stores was 122. Market The market for ready-to-wear clothing in Sweden was weak during the first quarter (September November 2013), with a negative sales trend of 1.6 percent during the quarter. The sales trend in the market for the 12-month period (December November 2013) was also negative, declining 0.9 percent. Comments on financial performance Net sales First quarter, September 2013-November 2013 Net sales amounted to 372 million (364) during the quarter, up 2.2 percent. MQ s sales in comparable stores rose 0.1 percent year-on-year, compared with a decline of 1.6 percent for the market. The product range for women noted a sales increase of 7.2 percent to SEK 193 million (180) and the product range for men a sales decline of 2.7 percent to SEK 179 million (184). Earnings First quarter, September 2013-November 2013 Gross profit amounted to SEK 223 million (220), corresponding to a gross margin of 60.1 per cent (60.5). Other external costs and personnel expenses for the quarter amounted to SEK 183 million (191).The cost level declined by SEK 8 million, despite the new stores, inflation and expenses for severance pay of 2.6 million,which is a result of both previous and current action programmes. Operating profit during the quarter was SEK 35 million (21), an operating margin of 9.4 percent (5.8). Depreciation/amortisation according to plan amounted to SEK 9 million (10). Net financial items for the first quarter amounted to an expense of SEK 3 million (expense: 3). Profit after financial items was SEK 32 million (18). Profit after tax amounted to 25 million (13). Expansion Efforts to find new store locations are proceeding as planned. The further development of MQ Shop Online is continuing. Cash flow Cash flow from operating activities during the quarter totalled SEK 6 million (negative: 5). The positive cash flow trend was primarily attributable to the higher earnings. Cash flow after investments amounted to SEK 4 million (negative: 19). Inventories At 30 November 2013, the value of inventories was SEK 269 million (252). The increase in inventories is a result of new stores and the launch of new brands. In total, the composition of inventories is adjudged to be at a satisfactory level. Investments Investments during the period totalled SEK 2 million (14) and mainly pertained to investments in existing stores. The store in Helsingborg City has been remodelled. Reduced retail space and improved accessibility on the ground floor have generated increased sales per square metre. Financing and liquidity At 30 November 2013, interest-bearing net debt amounted to SEK 310 million, compared with SEK 332 million at the same date in the preceding year. At the end of the period, cash and cash equivalents amounted to SEK 29 million (23). Interest-bearing net debt/ebitda was 3.1 (2.8) for the 12-month period of December 2012 November Events during the first quarter A comprehensive seven-stage action programme has been formulated focusing on sales-promotion and cost-saving measures both accelerating and applying the brakes including measures to cut costs by SEK 50 million during the 2013/2014 financial year. The Helsingborg City store was reopened. Reduced retail space and improved accessibility on the ground floor have boosted sales and resulted in sharply increased sales per square metre. Shop online in the store whereby customers are given an opportunity to shop in a comfortable manner via MQ s Shop Online was introduced Events after the end of the reporting period MQ has been nominated as Sweden s best E- shopping website by Internet World. Employees The average number of full-time employees during the 12-month period (December November 2013) was 654 compared with 700 in the yearearlier period. 4

5 Related-party transactions There were no material related-party transactions during the period. Risks and uncertainties MQ s operations are exposed to a number of risks that are completely or partly beyond the company s control, but which could impact sales and earnings. The risks that the company is exposed to include the economic trend, shifts in fashion and interestrate and currency risks. MQ is dependent on consumer preferences with respect to trends, design and quality. With the aim of minimising the risks associated with shifts in fashion, the company makes conscious efforts to develop its trend monitoring, information systems, forecasts and supply chain management and to shorten lead times in the development of products. The purchasing power of Swedish consumers is a prerequisite for retail growth. This is particularly important for growth in the high price ranges, characterised by high fashion content among retailers and brand specialists. It is probable that a change in Sweden s economic growth would impact the purchasing power of consumers and thus growth in the retail sector. Financial risks pertain to fluctuations in the company s earnings and cash flow resulting from movements in exchange rates, interest rates, liquidity and credit risks. The Group s financial risks are managed by the Group s finance department, which is in charge of identifying and minimising the risk of negative effects on earnings and improving the predictability of future earnings. For further information about financial instruments and risk management, reference is made to the Administration Report and to Notes 23 and 24 of the Annual Report for the 2012/2013 financial year. Annual General Meeting The Annual General Meeting will be held in Gothenburg on 30 January The Annual Report is available on Accounting policies This condensed consolidated year-end report has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable regulations of the Swedish Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with Chapter 9 of the Swedish Annual Accounts, Interim Financial Reporting. For the Group and the Parent Company, the same accounting policies and measurement principles have been applied as in the most recent Annual Report. Parent Company The Parent Company s net sales during the quarter amounted to SEK 3 million (3) and the result after financial items to a loss of SEK 1 million (loss: 1). No investments were made by the Parent Company during the period. 5

6 The Board of Directors and the CEO give their assurance that the interim report provides a fair overview of the development of the Group s and Parent Company s operations, financial position and earnings, and also describes material risks and uncertainties facing the Parent Company and companies included in the Group. Gothenburg, 18 December 2013 Board of Directors MQ Holding AB Erik Olsson Chairman of the Board Göran Barsby Board Member, Deputy Chairman Thomas Nyberg Board Member Eva Redhe Ridderstad Board Member Bengt Jaller Board Member Christina Ståhl Board Member Christina Ståhl President Teleconference A teleconference will be held at 09:30 a.m. on 19 December for analysts, investors and the media. The presentation will also be webcast on To participate, please call +46 (0) in Sweden and +44 (0) internationally. Reporting schedule Interim report, second quarter, December 2013 February March 2014 Interim report, third quarter, March 2014 May June 2014 (note change of date) Year-end report Fourth quarter, June 2013 August October 2014 This constitutes information that MQ Holding AB (publ) is legally obliged to publish under the Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for publication on 19 December 2013 at 07:15 a.m. (CET). Contact For further information, please contact: Christina Ståhl, President and CEO: telephone: +46 (0) Tony Siberg, Deputy CEO and CFO: telephone: +46 (0) MQ Holding AB S:t Eriksgatan 5 Box SE Gothenburg Corp. Reg. No This interim report has not been reviewed by the company s auditors. 6

7 Consolidated statement of earnings and other comprehensive income Condensed consolidated statement of comprehensive income in (SEK m) 2013/14 Rolling 12 Months Dec 12-Nov13 Financial year Sept-Aug Net sales ,470 1,463 Other operating income Total operating income ,476 1,468 Goods for resale Other external costs Personnel expenses Depreciation/amortisation Operating profit Financial income Financial expenses Profit/loss after financial items Tax on profit/loss for the period PROFIT FOR THE PERIOD attributable to Parent Company shareholders OTHER COMPREHENSIVE INCOME Items that have been restated or that can be restated in profit for the period Translation difference Changes in fair value of cash-flow hedging COMPREHENSIVE INCOME ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS Earnings per share before dilution (SEK) Earnings per share after dilution (SEK) Average number of shares before dilution 34,631,507 34,631,507 34,631,507 34,631,507 Average number of shares after dilution 34,725,233 34,719,693 34,725,235 34,725,233 7

8 Consolidated balance sheet Condensed consolidated balance sheet (SEK m) 30 November November August 2013 ASSETS Fixed assets Intangible fixed assets 1,205 1,205 1,205 Tangible assets Total fixed assets 1,276 1,299 1,280 Current assets Inventories Current receivables 63 49, 114 Cash and cash equivalents Total current assets TOTAL ASSETS 1,637 1,623 1,728 EQUITY AND LIABILITIES EQUITY Liabilities Interest-bearing long-term liabilities Non-interest-bearing long-term liabilities Interest-bearing current liabilities Non-interest-bearing current liabilities TOTAL EQUITY AND LIABILITIES 1,637 1,623 1,728 Statement of changes in equity Specification of changes in the Period Period Period Sept-Aug Group s equity (SEK m) 2013/14 Equity, opening balance Total comprehensive income Buyback of own shares/incentive programme Dividend EQUITY, CLOSING BALANCE

9 Consolidated cash-flow statement Condensed consolidated cash-flow statement (SEK m) 2013/14 Financial year Sept-Aug Cash flow from operating activities before changes in working capital Changes in working capital Cash flow from operating activities Cash flow from investing activities Acquisition of intangible assets Acquisition of tangible assets Cash flow after investing activities Financing activities Amortisation Loans raised Dividend Utilisation of overdraft facility Cash flow from financing activities Cash flow for the period Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Key figures 2013/14 Rolling 12 Months Dec 12-Nov13 Financial year Sept-Aug Growth in net sales, % Sales growth, comparable stores, % Gross margin, % Operating profit, SEK m Operating margin, % Profit/loss after financial items Profit for the period Total depreciation/amortisation, SEK m Earnings per share before dilution, SEK Interest-bearing net debt, SEK m Interest-bearing net debt/ebitda, multiple Equity/assets ratio, % Equity, SEK m Average number of shares before dilution 34,631,507 34,631,507 34,631,507 34,631,507 Average number of shares after dilution 34,725,233 34,719,693 34,725,235 34,725,233 9

10 Shareholding structure Largest shareholder as of 29 November 2013 Name Number of shares Votes and capital, % DANSKE CAPITAL SVERIGE AB 4,324, % JALLER KLÄDCENTER AB 2,662, % LÄNSFÖRSÄKRINGAR FONDFÖRVALTNING AB 2,567, % ÖRESUND, INVESTMENT AB 2,462, % JPM CHASE NA 1,333, % LANCELOT AVALON 1,286, % DNB - CARLSON FONDER 1,195, % SVENSKA LÄRARFONDER 1,103, % UNIONEN 1,100, % CATELLA FONDFÖRVALTNING 1,007, % HANDELSBANKEN FONDER AB RE JPMEL 962, % FJÄRDE AP-FONDEN 760, % SKANDIA FONDER 746, % JPM CHASE NA 507, % NORDEA BANK AB (PUBL.) - SECURITIES FINANCE 469, % Total 15 largest 22,489,084 64% Other 12,667,423 36% Total 35,156, % 10

11 Parent Company income statement Parent Company income statement 2013/14 Sep- Nov Rolling 12 Months Dec 12-Nov13 Financial year Sept-Aug Net sales Other operating income Total operating income Goods for resale Other external costs Personnel expenses Other operating expenses Depreciation/amortisation Operating loss Income from shares Financial income Financial expenses Profit/loss after financial items Group contributions Profit/loss before tax Tax on profit/loss for the period PROFIT/LOSS AFTER TAX Parent Company balance sheet Parent Company balance sheet 30 November November August 2013 ASSETS Fixed assets Intangible assets Tangible assets Financial fixed assets Total fixed assets Current assets Current receivables Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Liabilities Interest-bearing long-term liabilities Interest-bearing current liabilities Non-interest-bearing liabilities TOTAL EQUITY AND LIABILITIES Assets pledged as security Shares in subsidiaries MQ brand Contingent liabilities Guarantees related to subsidiaries completion of leasing contracts Guarantees related to MQ Retail AB Total contingent liabilities

12 Definitions Gross margin Net sales less costs for goods sold as a percentage of sales. EBITDA Earnings Before Interest, Taxes, Depreciation and Amortisation. Equity Consists of share capital, other contributed capital, reserves and retained earnings, including the Group s profit for the year. Equity per share Equity divided by the number of shares on the closing date. Comparable sales The term comparable sales is used to designate all sales, with the exception of sales in new stores. A new store becomes comparable when it has been opened for one year. Interest-bearing net debt Interest-bearing liabilities less cash and cash equivalents. Interest-bearing net debt/ebitda Interest-bearing liabilities divided by EBITDA for the most recent twelve-month period. Operating margin Operating profit as a percentage of net sales for the period. Equity/assets ratio Equity as a percentage of total assets. MQ is one of Sweden s leading retailers of fashion brands. Through a select mix of proprietary and external brands, MQ offers men s and women s clothes with a high fashion content in attractive stores. The store chain currently comprises 122 stores and the aim is to establish MQ as the leading retailer of fashion brands in the Nordic region. The MQ share is listed on NASDAQ OMX Stockholm since June 18th, For more information, please visit our website at 12