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Annual report 2008/2009
- 2008/2009 In brief
- President’s comments
- Hemtex share
- Presentation of operations
- Board of Directors’ report
- Income statements
- Balance sheets
- Changes in consolidated shareholders’ equity
- Changes in Parent Company shareholders’ equity
- Cash-flow statements
- Notes
- Nine-year summary
- Proposed distribution of earnings
- Audit report
- Board of Directors
- Corporate Governance
- Management
- Hemtex stores
- Information about the AGM
- Annual reports archive
- Annual report 2009
- Annual Report 2010
- Annual Reports archive
Business concept, goals and strategies
Vision
Hemtex’s vision “Inspiration and renewal for all rooms” guides the Group’s development. Hemtex aims to ensure that customers in all countries find Hemtex so inspiring that they are enticed to refurbish their homes. This is a challenge that forces Hemtex to continuously improve its product range, store concepts and capacity to generate inspiring and marketable exposure.
Business concept
Hemtex’s business concept is to sell affordable home decor products that appeal to a broad spectrum of people. Accordingly, Hemtex’s product range shall comprise modern, up-to-date products that are highly affordable and offer excellent value for money. Hemtex focuses on a broad target group, regardless of the customer’s purchasing power, form of housing and area of residence.
Goals
Hemtex’s overriding goals were introduced in the 2006/2007 fiscal year. Several of the goals relate to targets over a business cycle. Hemtex’s overall goal is to retain its position as the leading home decor chain in Sweden and one of the leaders in the Nordic region and to achieve favorable growth and profitability. The objective is to achieve a market share of 15% in the Nordic market for home textiles. The company’s long-term financial targets are:
- annual, average total sales growth exceeding 15%
- an operating margin exceeding 15% over a business cycle
- an equity/assets ratio of 30 to 40%
- net debt/EBITDA that does not exceed 3
Given the current priorities as regards profitability within the existing store network, the Board of Directors decided to reduce the pace of new establishments. For the 2009/2010 fiscal year, four to six stores will be established, of which half will be owned by the Group. A review of the store structure is expected to result in a net reduction in the number of stores. During 2008/2009, a decision was taken to discontinue five stores, and about ten discontinuations will take place during 2009/2010. Combined, the announced measures will improve the operating margin to 13-15% over a three-year period.
Sales growth, %
The outcome over the past four years has been 44.1% in 2005/2006, 26.8% in 2006/2007, 9.4% in 2007/2008 and -13.5% in 2008/2009.
Operating margin, %
Over the past four years, growth has been 15.6% in 2005/06, 15.1% in 2006/07, 8.8% in 2007/08 and –2.3% in 2008/09.
Store growth in the Group
The net increase in stores within the Group over the past four years has been 39 stores in 2005/06, 62 stores in 2006/07, 17 stores in 2007/08 and 15 stores in 2008/2009.
Strategies
In August 2009, Hemtex will present a new business plan indicating the focus of the Group’s future strategy. The business plan contains a number of measures that will result in Hemtex being able to fulfill its long-term financial targets within a three-year period. Much of the work in implementing these measures has already started.
The new strategy can be summarized in the following points:
Customer value/Positioning
Hemtex shall have the leading product range and offer the market’s best service. The offering to customers shall be high-quality home textiles with unparalleled scope and depth in the core categories.
Product range
To live up to the customer value proposition, the product range must continue to be improved. A substantial reduction and concentration of the product range will be implemented with an increased proportion of base products and a lower proportion of trend products.
Prices will span over a broader range, with more premium products than today. More innovative products with new functions, new materials and new material combinations will be launched. Hemtex will continue to focus on its current target customers while at the same time expanding the offering to suit new target groups.
Stores
With a reduced product range, stores must be well-defined, inspiring and commercial. The store concept will be renewed and the graphic profile reviewed. Store display windows will be better utilized to draw attention and traffic. Smaller stores will have the same broad range (number of categories) but less depth (fewer product variants). Large stores will feature large product displays per product variant for selected products and more inspirational environments.
Service
Hemtex shall be characterized by truly great service and employees who are helpful and knowledgeable. Hemtex shall have a deep understanding of the customer’s problems and needs in the stores or in the use of the products in their homes and be able to offer solutions.
Pricing, campaigns and marketing
Hemtex has stopped its constant sales and replaced them with strong customer offerings. Inventory clearances will also take place in the future, but they must be balanced by information providing news, tips and ideas and by innovative products. Marketing must be informative, surprising and driven by ideas.
Purchasing and logistics
Greater efficiency and a smaller product range will provide substantial potential for reducing purchasing prices. Hemtex will work in a structured manner to consolidate, create greater capacity and subject suppliers to competition to improve the Group’s purchasing. There will be a focus on both purchasing prices and quality, as well as Hemtex’s environmental and social responsibility.
