CEO's Comments

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

The retail sector is changing and the shop experience is becoming increasingly important. There is an ever growing demand for attractive, efficient shop solutions. We are continuing to advance our position from a strategic perspective, and in recent years have invested considerable resources in product development and ITAB’s position in the shops of the future. 

Several of our customers are choosing to use a larger proportion of our all-inclusive offer, which is in line with our business concept of offering complete shop concepts. Our offer is competitive and we will continue to develop the concept in order to create more efficient and more attractive shop environments for our customers.


THIRD QUARTER

During the third quarter, sales increased by 23% compared to the same period last year. Currency-adjusted sales rose by 22%. Sales have improved in the UK. Sales have been slightly better in Central Europe and NorthEast, while Scandinavia have not developed as well. Sales within the companies acquired in Southern Europe have been in accordance with our expectations during the third quarter, and in line with the rest of the Group.

In the UK, where we consider that the change in the retail sector is at the cutting edge, our sales have developed better than last year. The shop experience is becoming increasingly important, and several of our existing customers are choosing to utilise a larger proportion of our offer in order to achieve a more efficient and more attractive shop environment. In our judgement, we have developed better than the market as a whole. Sales in the UK are increasingly project-based, resulting in shorter lead times. Sales of this type fit in well with our skills and organisational model, with local, flexible units close to the customer.

The Scandinavian market has been rather cautious, which has affected our sales. This also applies to our lighting sales, which have not developed as well due to somewhat cautious demand on certain markets.

JANUARY - SEPTEMBER

During the period, sales increased by 30% compared to last year, while currency-adjusted sales rose by 29%. All the market areas have developed better. Within La Fortezza, sales have been slightly below our expectations as a result of a weak start to the year, although they finished the period in line with the rest of the Group. Lighting sales have not developed as well as last year due to somewhat cautious demand on certain markets.

ACQUISITIONS IN GERMANY

We acquired two German lighting companies at the start of the third quarter, which jointly comprise one of the leading players as regards sales of lighting systems principally to the nonfood segment in the German market. The integration has gone according to plan and work has commenced on offering customers in Germany a combination of local lighting expertise with global sourcing of lighting products. The acquisition is a stage in the intensification of our marketing activities and reinforcement of our position. The acquisition is in line with ITAB’s strategy and continued investment in sales of a total concept for the retail sector.

MARKETING ACTIVITIES

Over recent years, considerable resources have been invested in product development and initiatives aimed at ensuring that the organisation will be well prepared for the development that is taking place in the retail sector. Product development of a digital all-inclusive offer for the physical shop has been conducted, for example including checkout arena, piri, endless aisle and click & collect. The shop experience is becoming more interactive, with the focus being placed on the consumer experience. The level of interest in our digital offer is strong among both national and international retail chains. Increased digitisation in the physical shop is driving forward our sales and development. Installations are taking place in combination with the rest of our offer.

THE FUTURE

We are expecting good growth in future. Market development in Southern Europe during the third quarter was in line with our expectations, and the integration of the La Fortezza Group is going according to plan. Many discussions regarding extended collaborations are being conducted with both existing and new customers.

The efficiency measures that were conducted last year, with particular focus on Belgium and Finland, have not yet produced the planned effect. These measures will provide a good position in future, but in our judgement this will take a little longer than anticipated. We will continue our long-term work within the Group aimed at streamlining all parts of the operation, in order to improve our offer.

We are carefully monitoring the trend in steel prices, rapid exchange rate fluctuations and the general political situation, which can change our conditions on the market.

We will continue the work throughout the entire Group aimed at offering existing customers a larger proportion of our product portfolio. Investments in product development and our position in the shop of the future are continuing, in order to further strengthen our offer to the customer.

Particularly in the UK market, we are seeing that project-based sales are becoming increasingly important and that rapid, flexible delivery methods are required. Our organisation, with local, flexible units close to the customer, is well equipped for sales of this type. We believe that such sales will become increasingly common on more markets. At the same time, several of our customers are expanding across large parts of the world, and our global presence is becoming even more important We have commenced the construction of a new production facility in China during the period. The facility is expected to be in operation during the second half of 2018, and we will primarily be supplying our European customers’ establishments in Asia.

We will be further developing our sustainability work. In recent years, we have developed a sustainability programme that supports both the business process and customer demands. The programme extends across the Group, and the companies will be working locally within each area of focus.

Our all-inclusive offer comprising many innovative solutions, alongside our working model and geographic presence, will lead to better business both for ITAB and our customers.

 

Jönköping 1 November 2017

Ulf Rostedt    

CEO, ITAB Shop Concept