Baltika Group ended the third quarter with a net loss of 392 thousand euros, which included one-off costs of 310 thousand euros mostly due to 8 store closures done during Q3 2023. The loss for the same period last year was 516 thousand euros.
The Group’s sales revenue for the third quarter was 3,817 thousand euros, decreasing by 33% compared to the same period last year. The main reasons for the decrease in retail sales were represented by the closures of 37 unprofitable stores done in the meantime all over the Baltics as well as a delay in the arrival of goods in stores due to global supply problems, which had a negative impact on our sales results, particularly during August and September.
E-com sales revenue in the third quarter of 2023 decreased by 21% for approximately 84 thousand euro, mostly driven by the logical shift towards off-line stores due to the easing of all restrictions during the third quarter. However, the 9-month results still show strong sales growth of 6% and 22% increase in gross profit compared to the same period last year, despite the company’s strategic decision to discontinue the Monton and Baltman brands.
The gross profit for the quarter was 1,920 thousand euros, decreasing by 963 thousand euros compared to the same period of the previous year (Q3 2020: 2,884 thousand euros) in line with the sales decrease as a logical consequence of a lower number of stores managed in our Group portfolio. The company’s gross profit margin was 50,3% in the third quarter, which is 0,6 percentage points lower than the margin of the third quarter of the previous year (Q3 2020: 50,9%). The decrease in gross profit is mostly due to the sale of residual Baltman stock in our existing stores all over the Baltics and in particular in the Estonian market.
The Group’s distribution and administrative expenses in the third quarter were 2,590 thousand euros, decreasing by 16% i.e., 498 thousand euros compared to the same period last year. More than 60% of the decrease in expense was related to cost reductions in a retail business, in particular with decrease in payroll costs by 24% compared to the same period last year.
In the first 9 months of the year, the group’s revenue decreased by 41% compared to the same period last year to 9,156 thousand euros. Retail sales revenue decreased by 46%, while e-store sales revenue increased by 6%. The Group’s 9-month result shows a loss, mainly caused by a negative impact of one cost due to 26 store closures executed during the last 9 months and also by COVID-19 restrictions in all Baltic countries which have affected our business already from 1 January 2023 until the end of May 2023. During the third quarter, our Omnichannel (on-line and off-line stores) has been affected also by well known global supply issues, which meant that seasonal autumn goods did not reach our retail network and e-store on time as originally planned.
Baltika Group’s focus during the third quarter of 2023 was to optimize even further the whole store network with some important unprofitable store closures across the Baltics and to keep under strict control all operating expenses as well as on the renewed Ivo Nikkolo brand launch.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Note | 30 Sept 2023 | 31 Dec 2020 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 3 | 773 | 1,427 |
| Trade and other receivables | 4 | 190 | 318 |
| Inventories | 5 | 2,954 | 3,467 |
| Total current assets | 3,917 | 5,212 | |
| Non-current assets | |||
| Deferred income tax asset | 140 | 140 | |
| Other non-current assets | 4 | 149 | 111 |
| Property, plant and equipment | 6 | 919 | 1,218 |
| Right-of-use assets | 8 | 6,484 | 9,199 |
| Intangible assets | 7 | 572 | 597 |
| Total non-current assets | 8,264 | 11,255 | |
| TOTAL ASSETS | 12,181 | 16,477 | |
| LIABILITIES AND EQUITY | |||
| Current liabilities | |||
| Borrowings | 9 | 358 | 252 |
| Lease liabilities | 8 | 1,955 | 3,127 |
| Trade and other payables | 10,11 | 3,083 | 3,019 |
| Total current liabilities | 5,396 | 6,398 | |
| Non-current liabilities | |||
| Borrowings | 9 | 1,259 | 874 |
| Lease liabilities | 8 | 4,824 | 6,493 |
| Total non-current liabilities | 6,083 | 7,367 | |
| TOTAL LIABILITIES | 11,479 | 13,765 | |
| EQUITY | |||
| Share capital at par value | 12 | 5,408 | 5,408 |
| Reserves | 12 | 3,931 | 3,931 |
| Retained earnings | -6,627 | -6,250 | |
| Net profit (loss) for the period | -2,010 | – 377 | |
| TOTAL EQUITY | 702 | 2,712 | |
| TOTAL LIABILITIES AND EQUITY | 12,181 | 16,477 |
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND COMPREHENSIVE INCOME
| Note | 3Q 2023 | 3Q 2020 | 9m 2023 | 9m 2020 | |
| Revenue | 13,14 | 3,817 | 5,658 | 9,156 | 15,502 |
| Cost of goods sold | 15 | -1,896 | -2,774 | -4,707 | -8,048 |
| Gross profit | 1,921 | 2,884 | 4,449 | 7,454 | |
| Distribution costs | 16 | -2,287 | -2,806 | -3,837 | -7,006 |
| Administrative and general expenses | 17 | -303 | -718 | -835 | -1,510 |
| Other operating income (-expense) | 18 | 369 | 5,841 | 685 | 5,878 |
| Operating profit (loss) | -300 | 4,139 | -1,459 | 1,931 | |
| Finance costs | 19 | -92 | -194 | -251 | -635 |
| Profit (loss) before income tax | -392 | -516 | -2,010 | 975 | |
| Income tax expense | 0 | 0 | 0 | 0 | |
| Net profit (loss) for the period | -392 | -516 | -2,010 | 975 | |
| Total comprehensive income (loss) for the period |
-392 | -516 | -2,010 | 975 | |
| Basic earnings per share from net profit (loss) for the period, EUR |
20 | -0.01 | -0.01 | -0.04 | 0.02 |
| Diluted earnings per share from net profit (loss) for the period, EUR |
20 | -0.01 | -0.01 | -0.04 | 0.02 |
Flavio Perini
Chairman of Management Board, CEO
[email protected]
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