Emperia Group's Q1 2014 revenue from sales came in at PLN 479 443 000, down 2.76% from the same period last year. The decline in sales resulted from the Easter being ‘moved’ to the second quarter and a merger of the Group's retail companies.
Consolidated net profit in Q1 2014 was PLN 3 229 000, lower than in the same period the previous year due to weaker performance of the entire retail segment. The following factors had a significant impact on the results: Easter shift, tough market competition, the cost of merging the retail companies, one-off costs connected with the closure of a Delima store and higher than expected costs of the new logistics solution. The Group's other operating segments generated profits comparable to the previous year.
It should be noted that despite the lower revenue, profit on sales grew by 12.55%. This mainly resulted from higher sales margins in the retail segment.
The beginning of the first quarter saw the completion of works connected with developing a new store format - Stokrotka Market, for new locations with a sales floor of 200-400 sqm. The new format will offer shoppers everything they need on a daily basis, including a wide range of fresh products in a convenient, self-serve formula. Through its compact format, Stokrotka Market will be even closer to the client, also thanks to its locations - in both residential developments in larger cities and in municipal towns. The new format is a new growth direction for the Stokrotka chain.
The process of rebranding supermarket stores was continued during the discussed period. The rebranding was completed at 36 retail locations.
A merger of the following retail-segment companies took place at the end of January 2014: Stokrotka Sp. z o.o., Maro-Markety Sp. z o.o. and Społem Tychy S.A. This one-off event translated into a temporary decline in sales, resulting from the necessity to organise the new retail locations that joined the Stokrotka chain, divide them into segments and designate them as one of the two formats: market or supermarket. The merger resulted in a temporary disruption of store operations due to having to close the locations for a short period of time, remodelling, rebranding, as well as assortment and operational changes. After the merger, Stokrotka has 23 retail locations in the market format. The company has also signed agreements for further locations. In the coming quarters, the number of market stores should increase substantially.
The first quarter of 2014 saw the completion of work on the "Stokrotka Supermarket Franchise" offering, consisting of a turn-key retail concept that includes unique operational solutions. The offering, unveiled in April this year, enables future franchisees to start their own business under the renowned, modern "Stokrotka" brand. It also provides an efficient, advanced logistics system, continuous assistance from a team of experts, comprehensive marketing and operational support, as well as access to an approved list of vendors offering favourable trade terms.
During the period in question, the logistics improvement process was continued. In February, the ninth regional warehouse was opened in Tarnobrzeg, and at the end of this month the last key category (tobacco products) was introduced to the central hub. In Q1 2014, about 80% of deliveries went through the central hub. This was the third quarter in which the new logistics system was operational. The company consistently improves logistics costs, which are still not yet at their target level.
In the first quarter, the Group's management continued the buy-back programme, believing that our shares are priced below fair value. Since the beginning of this year, PLN 16.3 million was spent on this objective. The company continues to treat the on-going share repurchase process as an important tool to distribute cash to our shareholders.
Additional information: Urszula Herecka tel. +48 516 010 573, urszula.herecka@emperia.pl
Information about Emperia Group:
Emperia is a dynamic and reputable Polish group focused on the FMCG retail segment.