The Scandinavian shoe and leathergoods retailer improved its results in the 1st quarter of its financial year, ended last Nov 30, despite weak sales in Sweden. The group’s recent acquisition of Morris, a leading Norwegian retail chain specializing in accessories, generated 14 percent of its turnover in the period, giving Wedins a strong lead on this segment.
Company turnover came to 311.4 million Swedish kronor (€33.4m-$49.5m) in the quarter, as compared to 270.5 million SEK in the year-ago period. The 36 Morris stores generated 43.5 million SEK (€4.7m-$7.0m) in sales, similar to its results in the year-ago period, helping revenues at Wedins’ accessories division to increase sharply. The revenues of the Accent and Rizzo divisions remained stable, while they sank slightly for the Wedins division.
Without the new stores, comparative store sales dropped overall by 2 percent in a Swedish shoe market that grew by only 2 percent over the period. Including Morris' stores, the total store count is now 214, compared with 181 in the 1st quarter of the previous year.
Gross margins improved to 62.3 percent of turnover, from 60.4 percent in the year-ago period, while earnings after tax grew to 16.8 million SEK (€1.8m-$2.7m) from 12.8 million SEK the previous year. Earnings before depreciation and amortization, or EBITDA, came to 19.5 million SEK (€2.1m-$3.1m) for the group as a whole, and were measured as 13 million SEK (€1.4m-$2.1m)for the Morris division.
The company has made efforts to control costs and to carry out efficient purchasing decisions. It recently moved its purchasing and production office to Shanghai in order to coax profit levels higher. It is likely to obtain cost synergies of up to 20 million SEK (€2.1m-$3.1m) per year from the recent merger with Morris. It is now the biggest accessory retailer in Norway and a leader in the segment in the Scandinavian region.
The integration and development of the newly acquired Morris stores will be led by Steffan Gustavsson, the former chief financial officer at Wedins. He will be replaced as CFO this month by Dennis Legin, who comes from a similar position at Bauhaus.