Interim Report 3 months - 1 January-31 March 2023
FIRST QUARTER (1 JAN-31 MAR 2023)
- Net sales declined by 12 percent to MSEK 1,505 (1,716), of which currency-adjusted sales declined 15 percent.
- Operating profit before depreciation and amortisation (EBITDA) excluding non-recurring items of MSEK 0 (-11) amounted to MSEK 138 (168) 1).
- Operating profit amounted to MSEK 70 (86) 1), corresponding to an operating margin of 4.7 percent (5.0).
- Profit after financial items totalled MSEK 57 (80).
- Profit after tax amounted to MSEK 41 (57).
- Earnings per share before and after dilution totalled SEK 0.15 (0.25). 2)
- Cash flow from operating activities amounted to MSEK -8 (-59). 3)
- The equity/assets ratio at the end of the quarter was 53 percent (46). 2)
- Net debt excluding lease liabilities amounted to MSEK 490 (718). 3)
1) ) EBITDA and operating profit for the comparative period (first quarter of 2022) was charged with non-recurring items of MSEK -11 and MSEK -21, respectively. Non-recurring items mainly consist of costs relating to transformation work under ITAB’s One ITAB strategy.
2) Including Discontinued Operations.
3) Comparative periods have not been restated related to Discontinued Operations.
EVENTS DURING THE REPORTING PERIOD
- In March, ITAB launched Onred, our unique technology platform for retailers that links together the Group’s portfolio of digital and physical solutions for increased efficiency and an improved store experience.
- During the quarter, new partnerships were signed with Rapitag, Signatrix and Theory+Practice with the aim of strengthening ITAB’s ecosystem of partners that complement the Group’s portfolio of innovative solutions.
- ITAB participated in EuroShop, the world’s leading retail trade fair, in Düsseldorf at the turn of the month February-March, where the Group’s technical solutions in exit systems, store guidance and checkouts attracted considerable attention from both new and existing customers.
EVENTS AFTER THE END OF THE REPORTING PERIOD
- ITAB’s 2023 Annual General Meeting will be held today, 10 May 2023, in Jönköping, Sweden. Among other resolutions, the Board of Directors proposes a dividend of SEK 0.50 (-) per ordinary share for 2022.
President’s comments –
STRENGTHENED GROSS MARGIN DESPITE LOWER SALES IN THE FIRST QUARTER
The indications of a downturn and the cautious approach from customers that we witnessed in the fourth quarter of 2022 negatively impacted sales in most of our geographic markets during the first quarter of the year, and we are seeing a clear economic effect. Currency-adjusted sales declined 15 percent compared with a relatively strong first quarter in the preceding year. At the same time, implemented price increases and a beneficial product mix with increased sales of our technical solutions led to a comparatively strong gross margin for the quarter. Our focus in the quarters ahead will be on strengthening our earnings trend through adapted cost-saving measures and targeted sales initiatives.
The decrease in sales was expected following cautious demand at the end of 2022, and we commenced activities to stimulate sales and adapt our costs already at year-end. It is gratifying to see that our unique and customer-adapted solutions are continuing to attract interest among our customers, not least those designed for loss and theft prevention, increased operational efficiency and reduced energy consumption for the retail sector. However, due to the current economic trend with high inflation and increased interest rates, many retailers are taking a cautious approach to investing in new stores and upgrading their existing stores.
ITAB’s participation in EuroShop, the world’s leading retailer trade fair, at the turn of the month February-March was a major success and ITAB was awarded the best exhibitor by the over 81,000 visitors to the fair. EuroShop marked the first time that our strategy was communicated in physical form to our customers through a number of custom-made solutions. The new partnerships and solutions presented received considerable attention from both new and existing customers, and we are now working intensely to turn this attention into new business opportunities. We can also note an increasing interest in our solutions from customers outside of Europe, primarily in North America and Australia.
The decline in sales negatively impacted our earnings performance, which could not be fully offset by our relatively strong gross margin. Operating profit for the quarter amounted to MSEK 70 (86), corresponding to an operating margin of 4.7 percent (5.0). The cost for participating in EuroShop negatively impacted earnings for the quarter.
Our margin-strengthening measures and price adjustments, our continual review of the cost structure and a beneficial product mix with increased sales of our technical solutions, services and energy-efficient lighting system were the main factors that have strengthened our gross margin in the past year. Our assessment continues to be that we have a better balance in relation to the cost increases we have encountered, but we are continuing to adjust our pricing when necessary on an ongoing basis. To strengthen our earnings performance, we are adapting our costs related to production, administration and sales, concludes President & CEO Andréas Elgaard.
For the full President’s comments, refer to the Interim Report.
Due to the Russian regime’s invasion of Ukraine in February 2022, ITAB has decided to discontinue its operations in Russia, which corresponded to approximately 2.5 percent of the Group’s annual sales. In accordance with IFRS 5, ITAB’s Russian operations are recognised as Discontinued Operations in the Group’s financial reports until further notice. Other operations comprise Continuing Operations. Comments and figures pertain to Continuing Operations, unless otherwise stated. Comparative figures in the consolidated income statement have been restated. For more information, see Note 8 Discontinued Operations in the Interim Report.
Jönköping, 10 May 2023
ITAB Shop Concept AB (publ)
Webcast presentation on 10 May 2023 at 10:30 a.m. CEST
ITAB arranges a webcast presentation today, 10 May 2023 at 10:30 a.m. CEST, in which Andréas Elgaard, President & CEO, and Ulrika Bergmo Sköld, CFO, will present the Interim Report for the first quarter 2023 and answer any subsequent questions. Weblink and telephone numbers are available at https://financialhearings.com/event/46049.
The information in this report is such that ITAB Shop Concept AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (EU Regulation No 596/2014). The information was submitted for publication, through the agency of the contact persons set out below, at 7:00 a.m. CEST on 10 May 2023.
This report is in all respects a translation of the Swedish original Interim Report. In the event of any discrepancies between this translation and the Swedish original, the latter shall prevail.
Telephone: +46-732 32 16 35
Mats Karlqvist, Head of Investor Relations
Telephone: +46-70 660 31 32
ITAB Shop Concept AB (publ), Box 9054, SE-550 09 Jönköping, Sweden
AT ITAB we help customers turn consumer brand experience into physical reality with our know-how, solutions, and ecosystem of partners. We co-create with our customers, efficient retail solutions that deliver convenient and inspiring consumer experiences. The offer includes consultative design services, custom-made interiors, checkout systems, consumer guidance solutions, professional lighting systems and interactive digital solutions for the physical store. ITAB has annual sales of approximately SEK 6.7 billion and approximately 2,700 employees. ITAB’s share is listed on Nasdaq Stockholm.