We - KappAhl

BUT HOW DOES THE ECONOMY AFFECT YOUR SALES? Of
course sales have been affected. But in terms of market share we
are still stable and growing slightly. There is an old theory that
our concept of value-for-money fashion is not affected as much
as others by fluctuations in the economy. There is a lot to support
that theory.
Another advantage we have is that few competitors address
our target group; fashion-conscious adults. Most other fashion
companies set their sights on a slightly younger group.
WHAT ARE YOU MOST PLEASED ABOUT? Our operating
margin. We have said we are to have an operating margin of 12
per cent over an economic cycle. We have clearly exceeded that
target in recent years, which were good for business overall. The
fact that in a period that has been among the toughest for many
years we succeeded in achieving an operating margin of almost
11 per cent I see as a sign of strength.
Another thing worth mentioning is our well-balanced inventory
levels. We have effective purchasing processes that mean
that we can quickly redirect ranges and volumes. Consequently,
the need to sell off garments has been reduced, with a good
effect on profitability.
WHICH COSTS HAVE YOU TRIED TO CUT? We have a sound
economic approach regardless of the state of the economy. We
examine everything in detail to eliminate unnecessary costs.
Managing this requires strict discipline, not least when times are
good, when it is easy to incur costs, and we are by no means
infallible. But by and large I think we are wise and practice what
we preach. If we offer high quality at fair prices to our customers,
we can demand that of our suppliers too – and we don’t spend
money on what we can do without.
We have a restricted organisation at our head office and our
purchasing offices around the world. It takes care of design,
purchasing, distribution and marketing of 60 million garments
sold annually in our 319 stores. All the stores are also managed
by the head office. This is handled very effectively.
Staffing accounts for a considerable proportion of costs in
our type of business. At the same time our employees constitute
the heart of KappAhl. The company consists of a lot of people
with an amazing amount of knowledge, who believe implicitly in
what we are doing. This contributes to satisfied customers who
return and tell their friends to visit us. We see this on a daily
basis in all our stores, from Brno in the south to Alta in the north.
This year we have not made any systematic cuts in the number
of employees. We have, however, adapted the use of employees
paid by the hour and temporary employees in stores to sales,
which has led to savings. At the same time it enables us to
quickly change up when the economy picks up.
Remember too that our operations
offer considerable economies
of scale.
Opening one more store in a good location
not only means that we have a new and substantial
source of revenue – it also makes a
contribution on the margin, reducing the unit
cost of goods sold.
Store premises are another major cost item. . There the economic
situation gives us an advantage, possibly leading to some downward
pressure on costs of premises when it comes to current
renegotiations.
WHAT WILL BE YOUR PRIORITIES IN 2009/2010? Store
expansion will continue. There are some places left in our
Nordic markets where we want to be established. But major
expansion in the future will be mainly in Eastern and Central
Europe.
If the economy becomes even tougher there will be increased
focus on prices. That benefits us. Consequently we will continue
on the path we have staked out, with customer focus in everything
we do.
2008/2009 Kappahl 5