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International Internet Magazine. Baltic States news & analytics Friday, 30.07.2021, 03:40

Estonia: Baltika clothing company posts EUR 3.3 mln in nine-month loss

BC, Tallinn, 17.10.2019.Print version
The listed Estonian garment manufacturer and seller Baltika Group ended the third quarter of 2019 with a net loss of 1.2 mln euros, while the net loss for the same period last year was 814,000 euros, the loss for the first nine months of the year increased from 1.7 mln euros last year to 3.3 mln euros this year.

"Competition has increased on the fashion brands' market in the Baltics, while making purchases online is also increasing, which means competing with the global market for Estonian fashion brands. Consequently, a certain loss of market share makes sense," Baltika CEO Mae Leyrer said.

"However, Baltika's results for the third quarter include indicators that confirm the company's turnaround, such as a significant reduction in marketing and general administrative costs and continued growth in e-store sales," she added.


Leyrer said that competition in the fashion world will definitely continue to grow in the coming years. "Estonian consumers are increasingly using online shopping, which opens up a global selection. In addition, our competitor COS entered the Lithuanian market this fall and Zara opened the largest store in the Baltics in Lithuania. These are clear signs of increasing competition continuing," she said.


The result for the third quarter of 2019 includes a negative impact of 77,000 euros of the new accounting standard IFRS 16, Baltika told the stock exchange.


The group's sales revenue decreased by 12% in the third quarter compared to the same period last year and amounted to 9.8 mln euros. The biggest sales channel, retail, saw sales decrease six percent and total 8.8 mln euros. Revenue decreased in all three Baltic markets, which was mainly driven by the weak September result and the closure of the Bastion brand, which is a part of Baltika Group's ongoing restructuring plan. Excluding the negative impact of the closure of Bastion, sales in August and July remained at the previous year's level.


The sales revenue of business customers decreased by 75% compared to the third quarter of last year and was 308,000 euros. The decrease in sales revenue of approximately 1 mln euros is related to the termination of contracts with franchise partners in Eastern Europe and Peek & Cloppenburg, a chain of department stores in Germany and Central Europe. The sharp decline in business customers' sales was expected, as the gradual exit from business customer sales channel is part of Baltika Group's ongoing restructuring plan.


Baltika Group's nine month sales revenue decreased by nine percent compared to the same period last year and was 29.5 mln euros. Retail sales decreased 4% and business customers' sales 62%, while e-store sales increased 23%.

As of the end of the third quarter, the equity of the company does not comply with the requirements of the Commercial Code. The management of the group is working on meeting the net asset requirement set out in the Commercial Code.


At the end of September, Baltika operated 84 stores. Their number decreased by 36 from the same period a year ago. The number of Baltika stores decreased by one to 21 in Latvia, by seven to 33 in Estonia and by one to 29 stores in Lithuania. Like a year ago, Baltika had one store in Finland. 


The group's stores operate under the following brands: Monton, Mosaic, Baltman, Ivo Nikkolo and Bastion. 

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