Kappahl struggles in a tough market but stays upbeat

By

Sandra Halliday

Published
Oct 11, 2018

Times are tough as we know and they certainly seem to be so for Swedish fashion retailer Kappahl. On Thursday the company released its full-year results and with the presentation headlined “a challenging year”, you knew the news wasn’t going to be good.

The company said that an intensely competitive market and lower store footfall meant that its sales fell with a 3.2% drop in the year to August. Q4 sales dropped too, but the quarterly fall of only 0.7% suggests that it’s starting to get some things right on the revenue front.

Operating profit for the full year fell sharply to SEK282 million from SEK448 million and in the final quarter it fell to SEK66 million from SEK139 million. Gross margin for the quarter fell to 59.2% from 60.7% a year ago and to 61.8% from 62.2% for the year.

But the company’s management remains surprisingly upbeat and said it’s keeping control of costs and has worked hard to make sure “that we are in a stronger starting position than a year ago.” 

That strength may not seem obvious from a first reading of the balance sheet but with e-tail sales up as much as 38%, and 50% of orders being fulfilled via click-and-collect, there are parts of the business that are doing well and that are also supporting its continued investment in its stores.