A quarter with significant changes
The quarter was characterized by significantly lower store sales, while e-commerce sales grew. The sector’s shift towards online sales accelerated in the quarter. PO.P’s e-commerce sales increased by nearly 200 percent, and the fully digital Man of a kind by close to 100 percent. The corporate restructuring led to many difficult and necessary business-critical decisions. Many changes were implemented in a short period of time, with the aim of improving operations.
THIRD QUARTER, MARCH 1, 2020 – MAY 31, 2020 IN SUMMARY
- Net sales decreased to SEK 324 M (511).
- Comparable sales for the Group on all national markets decreased by -32.1, percent.
- Sales for comparable units in Sweden decreased by -32.5 percent, compared to the market downturn of -28.5 percent.
- Operating income was SEK -285 M (-17).
- Operating income, excluding the new reporting standard IFRS 16, was SEK -97 M (-17). Goodwill impairment was SEK -184 M.
- Profit after tax was SEK -318 M (-27).
- Earnings per share was SEK -3.12 (-0.79).
- Cash flow from operating activities was SEK 147 M (18).
THE PERIOD, SEPTEMBER 1, 2019 – MAY 31, 2020 IN SUMMARY
- Net sales decreased to SEK 1,458 M (1,715).
- Comparable sales for the Group on all national markets decreased by -16.5 percent.
- Sales for comparable units in Sweden decreased by -15.8 percent, compared to the market downturn of -9.9 percent.
- Operating income was SEK -325 M (-10).
- Operating income, excluding the new reporting standard IFRS 16, was SEK -144 M (-10). Goodwill impairment was SEK -184 M.
- Profit after tax was SEK -385 M (-36).
- Earnings per share was SEK -4.99 (-1.07).
- Cash flow from operating activities was SEK 235 M (92). In the second quarter, a preferential rights issue raised some SEK 84.8 M before issue expenses.
EVENTS IN THE QUARTER
- The corporate restructuring of the subsidiaries Departments & Stores Europe AB, Polarn O. Pyret AB and Brothers AB was approved on 23 March.
- In April, Brothers’ operations in Finland, including 12 stores and an online platform, were wound down.
- The preliminary reconstruction plan for the Swedish companies was presented on 29 April. The District Court decided that corporate reconstruction will continue until 23 June 2020.
- Polarn O. Pyret Norge AS entered into corporate reconstruction on 28 May.
- In the quarter, goodwill impairment totaled SEK 184 M, of which SEK 141 M related to Departments & Stores and SEK 43 M to Brothers.
EVENTS AFTER THE END OF THE QUARTER
- The companies undergoing restructuring requested that the reconstruction period, which ended on 23 June, be extended by a further three months. The request is still being considered by the District Court, although there is currently no reason to believe that it will not be approved.
- Proposed arrangements with creditors were presented on 1 July. The proposal involves an initial payment of SEK 10,000 and 25 percent of the remainder to the companies’ creditors, implying impairment of 75 percent.
- The Covid-19 pandemic continued to negatively affect sales in June, with comparable sales down by -39 percent and store sales by -45 percent. E-commerce sales increased by 1 percent.
- Sales and profit in the final quarter will be negatively affected by the pandemic, although it is currently hard to gage the extent of the impact because of the volatile situation.