Jun 29, 2017
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Kappahl sees tough-but-profitable Q3, expands Newbie chain to UK

Jun 29, 2017

There were two Swedish fashion retailers in the news on Thursday and while Kappahl may not demand as much attention as much larger global giant H&M, it certainly had plenty to talk  about.

Kappahl - Kappahl

The company is continuing to expand and its mother-and-baby chain Newbie will be rolled out to the UK this autumn with its first physical store and a UK e-store both set to open. In fact, Newbie is a key expansion focus for  Kappahl with a new store in Sweden and two in Finland too. And this autumn it will also one in Poland

But the biggest news was its Q3 results with the company saying that the quarter began slowly but gathered steam as the period wore on. That was seen as a positive, even though the “aggressive market” meant it had to resort to discounting more than it might have liked to. This, unsurprisingly, hurt margins.

But the company was upbeat and said that “despite this, determined work on our new range strategy and pricing and campaign strategy has led to yet another good quarter.”

“Good” in Kappahl terms meant sales up just 1.8% to SEK1.217bn and up 5.5% to SEK3.668bn in the year to date (that’s last September to this May). The gross margin dipped to 63.7% from 64.9% as currency effects due to the weak krona also added to the impact of extra markdowns.

Operating profit rose to SEK119m from SEK103m and rose to SEK310m from SEK251m in the first nine months of the financial year. But while nine-months net profit rose to SEK222m from SEK186m, in Q3 it was down to SEK81m from SEK89m.

It made an operating loss in Poland in the latest quarter but expects to make a profit there for the full year.

The company operates almost 380 stores in Sweden, Norway, Finland and
Poland as well as a number of e-stores.

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