A weak quarter with a stable end

Transcription

1 A weak quarter with a stable end On 3 December, MQ informed the market in advance of the sales result and earnings range for the first quarter. The result for the quarter was in line with this information. Net sales amounted to SEK 364 million (380), down 4.0 per cent. Sales in comparable stores declined 6.6 per cent (The Swedish Retail Institute Index was up 0.5 per cent). The gross margin was 60.5 per cent (62.5). Operating profit totalled SEK 21 million (42), corresponding to an operating margin of 5.8 per cent (10.9). Profit after tax amounted to SEK 13 million (28), corresponding to SEK 0.38 (0.80) per share after dilution. Cash flow from operating activities was negative in an amount of SEK 5 million (34). Inventory amounted to SEK 252 million (276), which was SEK 24 million less than in the preceding year. Two new stores were opened in Sweden, Karlskoga and Malmö Emporia One new store was opened in Norway, Jessheim Two stores were upgrade and transferred to better locations, Vällingby and Hudiksvall Media investments increased SEK 10 million compared with the preceding year. A new savings program corresponding to SEK 15 million was launched. Total savings corresponding to SEK 35 million remain to be realised during the remainder of the financial year. No significant events took place after the end of the reporting period. Rolling Financial year SEK m 12 months Sep- 2012/13 Dec11-Nov12 Aug Net sales ,519 1,534 Gross margin, % Operating profit Operating margin, % Profit after financial items Profit after tax Earnings per share before dilution, SEK Earnings per share after dilution, SEK Number of stores, end of period

2 After six consecutive quarters of MQ outperforming the market and increasing its market shares, the first quarter (September-November) was weaker than expected. The preceding year s increase in market shares corresponds to the current year s decrease. MQ s sales during the first quarter were weaker because of the range in the first autumn delivery was insufficiently attractive. Last autumn, MQ made a reorganisation in design and purchasing, with the aim of strengthening the work process and organisation. This was a strategic change that had a temporary impact on the pace of work, which resulted in a weaker expression and composition for some brands in the early autumn. The later portion of the autumn range is better and sales stabilised in November. Inventory is well-balanced and is less than last year s level as the early autumn products have been sold. During the quarter, MQ strengthened its marketing activities according to plan, with broader coverage and enhanced intensity, partly to drive sales in a continued challenging market, but also with the aim of reinforcing the brand by launching a new communication platform. During the period, media investments rose by SEK 10 million compared with the preceding year. MQ Shop Online continues to increase and availability improved during the quarter since deliveries are now made directly from the central warehouse in Borås. In addition to the package of measures announced earlier of SEK 30 million on an annual basis, the company has identified further savings of SEK 15 million per year, which will be applied successively as of December. In total, savings of SEK 40 million will generate an effect during the current financial year, of which nearly SEK 35 million remains to be realised. The new line of growth by establishing smaller stores in Sweden has produced a positive response, which means that we are raising the pace of opening new stores in Sweden. During the quarter, two new stores were opened in Sweden and one in Norway. Mats Gärdsell, CEO 2

3 The MQ Group is a retailer of women s and men s fashion in the Swedish and Norwegian markets. The product portfolio, which focuses on fashionconscious consumers, contains a mix of proprietary and external brands. The stores are located in cities ranging from Ystad in the south to Luleå in the north of Sweden. MQ was launched in Norway in September 2010 and currently has six stores located in Oslo, Jessheim, Drammen, Skien and Kristiansand. All stores sell both men s and women s fashions. At the end of the period, the total number of stores was 119. The Swedish clothing retail sector has experienced an extended period of weak sales. During the first quarter (Sept 2012-Nov 2012), the market expanded by 0.5 per cent based on comparable stores and during the twelve-month period (Dec Nov 2012), the sales trend was negative, with a decline corresponding to 1.9 per cent (Swedish Retail Institute, HUI). Net sales First quarter, September November 2012 Net sales amounted to SEK 364 million (380) during the quarter, which was 4.0 per cent below the preceding year s level. MQ s sales in comparable stores declined by 6.6 per cent in the first quarter, compared with a market increase of 0.5 per cent. After six consecutive quarters of MQ outperforming the market and increasing its market shares, the first quarter was weaker than expected. The preceding year s increase in market shares corresponds to the current year s decrease. Total sales of women s fashions fell by 2.2 per cent to SEK 180 million (185) and total sales of men s fashions declined by 5.8 per cent to SEK 184 million (195). Earnings First quarter, September November 2012 Gross profit totalled SEK 220 million (237), corresponding to a gross margin of 60.5 per cent (62.5). The early autumn range produced a particularly weak sales performance in October, which resulted in larger price reductions compared with the year-earlier period. Other external costs and personnel expenses for the quarter amounted to SEK 191 million (186). The cost increase is attributable to new stores and normal cost increases for rent, salaries and so forth. Furthermore, MQ intensified its marketing activities by an amount corresponding to SEK 10 million compared with the preceding year. The on-going savings programme of more than SEK 30 million reduced the level of the above costs in the first quarter. A new savings programme corresponding to SEK 15 million will be launched successively from December and onward. Of these two savings programmes, SEK 35 million remains to be realised during the remainder of the financial year. Operating profit for the quarter totalled SEK 21 million (42), corresponding to an operating margin of 5.8 per cent (10.9). Depreciation/amortisation according to plan amounted to SEK 10 million (11). Net financial items amounted to an expense of SEK 3 million (expense: 3) for the first quarter. Profit after financial items was SEK 18 million (38). Expansion Efforts to find new store locations in Norway and Sweden are proceeding according to plan. The further development of MQ Shop Online is progressing. Cash flow MQ s cash flow from operating activities was negative in an amount of SEK 5 million (34) during the quarter. Cash flow after investments amounted to an expense of SEK 19 million (22). Inventory On 30 November 2012, inventory amounted to SEK 252 million (276). Overall, the size and composition of the inventory is deemed to be at a satisfactory level. Investments Investments of SEK 14 million (12) were made during the period and pertain to investments in both new and existing stores. Three stores were opened during the quarter, of which two in Sweden (Karlskoga, Malmö Emporia) and one in Norway (Jessheim). Two stores were upgraded and transferred to better locations, Vällingby and Hudiksvall On 30 November 2012, interest-bearing net debt totalled SEK 332 million (322). At the end of the period, cash and cash equivalents amounted to SEK 23 million (49). Interest-bearing net debt/ebitda was 2.8 (2.0) for the twelve-month period December November MQ opened two new stores in Sweden, Karlskoga and Malmö Emporia, as well as one new store in Norway, Jessheim. Two stores were upgraded and transferred to better locations, Vällingby and Hudiksvall. MQ increased its media investments by SEK 10 million compared with the preceding year. 3

4 A new savings programme corresponding to SEK 15 million was launched. Total savings corresponding to SEK 35 million remain to be realised during the remainder of the financial year. On 3 December, MQ informed the market in advance of the sales result and earnings range for the first quarter. The result for the quarter was in line with this information. The average number of full-time employees during the first quarter (September 2011-November 2012) totalled 700, compared with 709 in the year-earlier period. No significant transactions were conducted with related parties during the period. MQ s business is exposed to various risks that are fully or partly beyond the company s control, but which may impact on sales and earnings. The risks to which the company is exposed include economic trends, shifting fashion trends, interest risk and currency risk. MQ is dependent on consumer preferences in terms of trends, design and quality. The company works actively to develop its trend monitoring, information systems, forecasts and goods supply, and to shorten production lead-times to minimise risks associated with shifting fashion trends. Purchasing power among Swedish consumers is a precondition for growth in the retail sector. In particular, this is a key factor underlying growth in the upper price range collections featuring a high fashion content in the specialised retail segment and among brand specialists. Any change in economic growth in Sweden would impact consumer purchasing power and thus retail sector growth. Financial risk relates to fluctuations in the company s earnings and cash flow due to changes in exchange rates, interest rates, liquidity and credit risks. Management of the Group s financial risks is performed by the Group s finance department, which is tasked with identifying and minimising the risk of adverse effects on profits and improving the predictability of future earnings. For further information on financial instruments and risk management, refer to the Administration Report and Notes 23 and 24 in the 2010/2011 Annual Report. The Parent Company s net sales for the first quarter totalled SEK 3 million (2) and an operating loss of SEK 1 million (loss: 1) was recognised. The Parent Company made no investments during the period. The Annual General Meeting will be held in Gothenburg on 31 January The Annual Report is available at This condensed interim report for the Group was prepared in accordance with IAS 34 Interim Financial Reporting and the applicable provisions in the Swedish Annual Accounts Act. The interim report for the Parent Company was prepared in accordance with Chapter 9, Interim Reports of the Swedish Annual Accounts Act. For the Group and the Parent Company, the same accounting policies and valuation policies have been used as in the most recent Annual Report. 4

5 The Board of Directors and the Chief Executive Officer affirm that this interim report provides a true and fair view of the Parent Company s and the Group s operations, position and performance, and describes the material risks and uncertainties faced by the Parent Company and the companies in the Group. Göteborg, 19 December 2012 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 Mats Gärdsell CEO On Thursday, 20 December 2012, at 9:30 a.m., MQ will hold a press conference for analysts, investors and the media. It will also be possible to follow the presentation by webcast directly at To participate, please call +46 (0) in Sweden, and +44 (0) internationally. Interim report, second quarter, December 2012-February March 2013 Interim report, third quarter, March 2013-May June 2013 For further information, please contact: Mats Gärdsell; CEO: +46 (0) Tony Siberg, Deputy CEO and CFO: +46 (0) MQ Holding AB S:t Eriksgatan 5 Box SE GOTHENBURG, SWEDEN Corp. Reg. No This interim report has not been reviewed by the company s auditors. 5

6 Consolidated statement of comprehensive income Consolidated statement of comprehensive income in (SEK m) 2012/13 Rolling 12 months Dec11-Nov12 Financial year Sep- Aug Net sales ,519 1,534 Other operating income Total operating income ,524 1,538 Goods for resale Other external costs Personnel expenses Depreciation/amortisation Operating profit Financial income Financial expenses Profit after financial items Tax on profit/loss for the period PROFIT AFTER TAX attributable to Parent Company shareholders Other comprehensive income Translation difference Changes in fair value of cash-flow hedging TOTAL 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 34,719,693 34,651,139 34,719,693 34,719,693 6

7 Condensed consolidated balance sheet (SEK m) 30 November November August 2012 ASSETS Fixed assets Intangible fixed assets 1,205 1,205 1,205 Tangible fixed assets Total fixed assets 1,299 1,304 1,295 Current assets Inventories Current receivables Cash and cash equivalents Total current assets TOTAL ASSETS 1,623 1,680 1,669 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 1,623 1,680 1,669 Specification of changes in the Group s equity (SEK m) Period 2012/13 Period Period Sep-Aug Equity, opening balance Total comprehensive income Buyback of own shares/incentive programme Dividend EQUITY, CLOSING BALANCE

8 Condensed consolidated cash-flow statement (SEK m) 2012/13 Financial year Sep-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 fixed assets Acquisition of tangible fixed assets Cash flow after investing activities Financing activities Amortisation 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 /13 Rolling 12 months Dec11-Nov12 Financial year Sep-Aug Growth in net sales, % Growth in net sales, comparable stores, % Gross margin, % Operating profit, SEK m Operating margin, % Profit after financial items Profit after tax Total depreciation/amortisation, SEK m Earnings per share after 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 34,719,693 34,651,139 34,719,693 34,719,693 8

9 Largest shareholder as of 30 November 2012 Namn Number of shares Votes and capital, % CAPMAN BUYOUT VIII FUND A LP ,1 JALLER KLÄDCENTER AB ,2 CAPMAN EQUITY VII A LP ,2 Capman ,1 ÖRESUND, INVESTMENT AB ,0 JPMEL RE DEPOSITORY FOR ,9 Länsförsäkringar fondförvaltning AB ,5 Svenska Lärarfonder ,4 DnB - Carlson fonder ,2 CAPMAN EQUITY VII B LP ,9 Catella Fondförvaltning ,8 Skandia fonder ,0 MANEQ2005AB ,9 NORDEA BANK AB (PUBL.) - SECURITIES FINANCE ,5 FJÄRDE AP-FONDEN ,5 Total 15 largest ,1 Others ,9 Total ,0 9

10 Condensed Parent Company income statement (SEK m) 2012/13 Rolling 12 months Dec11-Nov12 Financial year Sep-Aug Net sales Other operating income Total operating income Goods for resale Other external costs Personnel expenses Other operating expenses Depreciation/amortisation Operating profit/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 Condensed Parent Company balance sheet (SEK m) 30 November November August 2012 ASSETS Fixed assets Financial fixed assets 1,111 1,110 1,111 Total fixed assets 1,111 1,110 1,111 Current assets Current receivables Cash and cash equivalents Total current assets TOTAL ASSETS 1,155 1,121 1,120 EQUITY AND LIABILITIES Equity Liabilities Interest-bearing long-term liabilities Interest-bearing current liabilities Non-interest-bearing liabilities TOTAL EQUITY AND LIABILITIES 1,155 1,121 1,120 Pledged assets Shares in subsidiaries 1,111 1,110 1,111 MQ brand Contingent liabilities Guarantees related to subsidiaries completion of leasing contracts General surety, MQ Retail AB Total contingent liabilities MQ Holding has issued an unlimited general surety for the MQ Retail AB subsidiary, which amounted to SEK 96 million on the balance-sheet date. The amount is included in the table above. 10

11 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. Interest-bearing net debt/ebitda Interest-bearing liabilities less cash and cash equivalents, divided by EBITDA for the most recent 12-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. Equity per share Equity divided by the number of shares on the closing date. Comparable sales All sales except sales in new stores are termed comparable sales. A new store becomes comparable when it has been open for one year. Interest-bearing net debt Interest-bearing liabilities less cash and cash equivalents. 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 119 stores and the aim is to establish MQ as the leading retailer of fashion brands in the Nordic region. The MQ share has been listed on NASDAQ OMX Stockholm since 18 June For more information, please visit our website at 11