Annual Report 2012/13 - Clas Ohlson

Director’s report
Clas Ohlson AB (publ), corporate registration number 556035-8672
The Board of Directors and Chief Executive Officer of Clas
Ohlson AB (publ), with registered office and head office in
Insjön, in the Municipality of Leksand, hereby present the
annual accounts for the financial year 1 May 2012 to 30
April 2013. Unless otherwise stated, the figures relate to
the Group. Figures in brackets relate to the preceding year.
All figures are stated in millions of Swedish kronor (SEK M)
unless otherwise indicated.
Operation
The operation consists of the sale of products in the Hardware,
Home, Multimedia, Electrical and Leisure categories,
through the company’s own stores and by mail order/
Internet. The range is focused on reasonably priced products
that are needed in everyday life. The company has
operations in Sweden, Norway, Finland and the UK. The
number of stores at year-end totalled 174, of which 73
were in Sweden, 62 in Norway, 27 in Finland and 12 in
the UK.
The product range comprises around 15,000 items
bought from a large number of suppliers in some 30
countries. The products are bought in to the distribution
centre in Insjön and from there are distributed to customers
through the company’s own stores in Sweden, Norway,
Finland and the UK or by mail order/Internet direct to
customers.
Significant events
During the financial year, 17 new stores were opened, of
which five in Sweden, six in Norway and six in Finland. In
addition, mail order/Internet has been launched in Finland
and the UK.
A new e-commerce platform, which was launched
during the first half of 2012/13, has resulted in increased
visitor traffic and higher sales. In Finland and the UK,
where knowledge about Clas Ohlson is lower than in
Sweden and Norway, e-commerce will be an important
complement in ensuring that more customers discover
Clas Ohlson.
At the end of November 2012, Clas Ohlson launched
a mobile-adapted version of e-commerce in all markets.
The launch is strategically important for being able to meet
our customers through parallel channels and offer the best
availability and service, adapted to the customers’ needs.
The venture in e-commerce will also generate new opportunities
to cost-efficiently establish the operation and
expand in new markets. Initially, the venture will entail
increased sales costs due to investments in systems and
logistics solutions. In early March 2013, the new Club Clas
loyalty programme was launched in Sweden. The aim of
the loyalty programme is to generate further value for Clas
Ohlson’s customers. Together with other sales and service
channels with stores, e-commerce via computers, tablets
and mobiles, catalogues, telephone customer service and
social media, Club Clas will provide accessible, inspiring
and attractive solutions to everyday practical problems.
In addition to benefits in the form of customised club discounts,
based on areas of interest and purchasing history,
members will receive bonus points on all purchases, invitations
to themed evenings and access to tips and advice.
Higher customer loyalty will generate the prerequisites for
higher sales resulting from higher visitor frequency and
higher average receipts, as well as the opportunity for
more effective marketing. The launch exceeded expectations
and more than a quarter of a million customers have
already become members of the customer club.
Sales and profits
Sales totalled SEK 6,519 M, compared with SEK 6,260 M,
up 4 per cent. In local currencies, sales increased 5 per
cent. Mail order/Internet sales totalled SEK 122 M (95), up
28 per cent. Clas Ohlson’s new e-commerce platform was
launched in the Nordic region and the UK during the April
to September 2012 period, which had a positive impact
on mail order/Internet sales.
Sales were distributed as follows:
Sales area (SEK M)
Percentage
Percentage change,
2012/13 2011/12 change local currency
Countries
Sweden 3,028 2,929 + 3 + 3
Norway 2,665 2,561 + 4 + 5
Finland 563 517 + 9 + 15
UK 263 254 + 4 + 3
6,519 6,260 + 4 + 5
The 4 per cent increase in sales by stores is broken down
as follows:
Comparable stores in local currency
New stores
Exchange-rate effects
Total
– 4 per cent
+ 9 per cent
– 1 per cent
+ 4 per cent
The gross margin was 41.6 per cent, which is 0.5 percentage
points lower than the preceding year (42.1). The
margin was negatively impacted by exchange-rate effects
and sales mix.
The share of selling expenses increased 1.8 percentage
points to 32.3 per cent (30.5). The increase was primarily
due to lower sales in comparable stores, and higher
depreciation. Start-up costs for new and remodelled
stores, including the scrapping of fittings, amounted to
SEK 44 M (46).
Depreciation for the year amounted to SEK 198 M,
compared with SEK 179 M for the preceding year. The
increase was mainly attributable to new stores, as well as
depreciation pertaining to e-commerce and IT-related support
processes.
Operating profit amounted to SEK 431 M (561). The
change was primarily due to lower sales in comparable
stores and lower gross margin compared with the preceding
year. The operating margin was 6.6 per cent (9.0).
Profit after financial items amounted to SEK 420 M (551).
Spot exchange rates for key currencies averaged SEK
1.16 for NOK and SEK 6.66 for USD, compared with 1.17
and 6.60, respectively, in the preceding financial year.
Currency hedging was undertaken in USD and NOK. The
company’s policy is to hedge 50 per cent of anticipated
flows during a catalogue period.
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Director’s report