Roland Nilsson, who took on the reins of the large Scandinavian retail group in November of 2002, happily reports a small profit for the 1st quarter of Wedins’ new fiscal year, which now starts on Sept. 1 like that of Vivarte and other major retailers. He predicts that the full financial year will show a significant improvement in profitability against the previous one, which was weighted down by heavy one-time restructuring costs.
Among the factors of improvement, Nilsson mentions the integration of complementary ranges of shoes and leathergoods under the same roof, a concept that should be implemented in a total of about 80 stores by the end of this financial year. They first few stores that have adopted this format have already recorded big increases in sales per square meter and per working hours.
On a pro-forma basis, group sales declined by 7.6 percent in the 3 months ended last Nov. 30 to 260.8 million Swedish kronor (e28.5m-$35.9m), due in large part to a reduction in the total number of stores – from 229 to 219 – and to a 10 percent decline in the value of the Norwegian crown against the Swedish currency. Sales in Norway, where the group sold many of its Park Sko stores, dropped to 49.2 million SEK (e5.4m-$6.8m).
Wedins’ shoe sales in Sweden rose by nearly 4 percent in volume, but their average price declined by about 7 percent due to a change in the price mix and in the selection, which favors private label styles. As a result, Wedins’ shoe sales in Sweden were off by 3.6 percent on a same-store basis during the period, while the national footwear market declined by just over 2 percent.
The Wedins chain is being repositioned in the high-volume segment, a process that should be completed by next Spring. The group’s higher-end shoe store format, Rizzo, recorded a sales decline of 9 percent during the latest period to 41.4 million SEK (e6.7m-$8.5m).
The group had a net profit of 2.0 million SEK (e0.2m-$0.3m) in the quarter, compared with a net loss of 78.9 million SEK in the year-ago period, which included a writeoff of 52.4 million SEK (e5.7m-$7.2m) worth of goodwill. Even before depreciation and amortization, Wedins also managed to record an operating profit (Ebitda) of 17.0 million SEK (e1.9m-$2.3m) against a loss of 13.3 million SEK. The gross profit margin jumped from 47.3 to 57.5 percent, thanks in part to the lower value of the dollar and to the fact that 6 percent of the margin was eaten up a year ago by inventory write-downs.