CEO's Comments

We will continue to develop the concept in order to create more effective and attractive shops

January to September 2017


This year has been a major challenge to date. The retail sector is changing and is cautious in several markets. During the third quarter, we have extended our streamlining programme as a result of reduced sales. In the longer term we have a positive view of the change in the sector, however, and we are continuing our investments in product development and our working method in order to strengthen ITAB’s position in the shops of the future.

Third quarter
During the third quarter, sales decreased by 12% compared to the same period last year. Currency-adjusted sales fell by 16%. The market remains cautious and is more volatile than before, and it is difficult to adapt to this in the short term.
Profits have been adversely affected by the sales trend in several markets. This, along with the trend in raw material prices, has had a negative impact on profits. As a result of the sales trend, the streamlining programme that was introduced during the first quarter of the year has been extended.

January-september
During the period January-September, sales decreased by 5% compared to the same period last year. Currency-adjusted sales fell by 8%. The first three quarters have been challenging in many ways. The retail sector is changing and several chains have adopted a cautious approach. We have conducted a series of marketing activities during the period in the form of product development and sales initiatives. These have been intended to strengthen ITAB’s position in the shops of the future, and have resulted in increased sales costs in the short-term.
Within our various customer groups, it is above all the construction and home furnishings sectors that have increased compared to last year. This increase has taken place in the majority of our markets, principally within the low-price segment. Sales have decreased slightly within the food sector, primarily in the UK and Southern Europe. Sales have decreased within fashion, primarily in the UK and NorthEast. Sales within other customer groups have also decreased, principally within electronics and sport.

Streamlining programme and investments for the future
During the first quarter of 2018, ITAB launched a streamlining programme, with one of the goals being reduced costs as a result of the reduced rate of turnover. The start of the third quarter was weaker than anticipated, and as a result the streamlining programme was further extended. The streamlining programme will be implemented gradually from 2018, achieving full effect in 2020, with an estimated saving of approx. SEK 300 million at a cost of approx. SEK 75 million before tax. The programme includes both shutting down and merging operations on several different markets. The programme also includes streamlining measures in our production facilities, in order to achieve increased flexibility and shorter lead times. During the first three quarters of the year, only a small proportion of the savings programme has had any effect.
The programme also includes staff cuts amounting to around 400 people. So far, during the period January-September, around 200 employees have left the business, the majority in Asia. The remaining staff cuts, amounting to around 200 employees, will principally take place in Europe.
At the same time, aggressive initiatives are continuing in relation to new concepts and products for the shops of the future. Over recent years, ITAB has made considerable investments in product development and initiatives aimed at ensuring that the organisation will be well prepared for the developments that are taking place in the retail sector. In future, skills development and changes to the sales organisation will be implemented. This is being done to ensure that ITAB’s all-inclusive offer is exposed to both new and existing customers, which is expected to result in increased sales.
All of these measures are intended to counteract a more volatile market in the short term and strengthen ITAB’s market position in the long term.

Future prospects
We are still witnessing a cautious attitude in several markets. The changes in the sector mean that the market is difficult to judge and extremely volatile in the short term. We are following market developments closely and making adjustments in line with our streamlining programme. We are also continuing to carefully monitor the trend in steel prices, exchange rate fluctuations, the general political situation and the general development of the retail sector, which can change our conditions in the market.

 

 

Jönköping 26 Oktober 2018

Ulf Rostedt    

CEO, ITAB Shop Concept