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Top Secret up, TXM down, Troll online

Aneta Cichla 12 September 2017

Aneta Cichla

Deputy editor in chief, journalist

+48 22 356 25 15

Aneta is passionate about the retail real estate market and everything associated with it. She has worked in the editorial department of ‘Eurobuild CEE’ for seven years. Prior to this she was employed as a journalist for the Retailnet.pl portal and for Shopping Center Poland magazine. In her free time she enjoys reading books, walking the dog and working out at the gym. She also loves watching martial arts fights.

POLAND Redan, the owner of the Top Secret, Drywash and Troll clothing stores as well as the TXM discount brand, has expressed satisfaction with its latest results for the fashion segment, despite generating some losses.

Top Secret has reached its profitability threshold. TXM, however, has still to rebuild the sales volumes lost as a result of stock-related issues. The company has been experiencing opposing trends in both its segments. The fashion segment has improved its results significantly through increasing its margin and lowering the costs of sales and overheads. Meanwhile, the results of the discount section have declined, due to the lack of sales growth that would have been proportional to the development of the chain’s shops. Redan has also decided to move its Troll fashion brand onto the internet and phase out its sales in physical stores. App. 90 pct of the retail outlets with the Troll logo have already been phased out. Troll still has 17 stores, which will be gradually closed down as the brand ultimately becomes available exclusively online. Due to this the company registered a PLN 6 mln reduction in sales y-o-y. Its Top Secret brand, however, enjoyed improved y-o-y sales of PLN 6.6 mln and a profit of PLN 0.4 mln. The factors behind this improvement included an increase in its retail margin (to 44.3 pct) with a simultaneous decrease in costs of PLN 5 mln. “We expect to maintain the growth trends into the near future. At the same time, we have taken into consideration the fact that H2 is a more profitable period for retail because of the seasonal factor and we are convinced that our fashion segment will end this year in the green,” commented Bogusz Kruszyński, the CEO of Redan.

Costs soar for TXM

The discount division of the group, TXM, recorded much lower results than expected. Over the period its sales increased by only 0.4 pct to PLN 168.5 mln. In the meantime, sales costs and overheads increased by 32.6 pct to PLN 86.6 mln. The company had an operating loss of PLN 14.2 mln compared to a profit of PLN 5.7 mln registered in H1 2016. “This is an effect of the retail chain’s stock shortfalls after the resolution of issues related to the sale of goods from the warehouse,” explains Bogusz Kruszynski. The sales of TXM shops did not increase at the same pace as the development of the brand’s stores, and the chain has been enlarged substantially. The introduction of a novel format in the new stores also incurred additional costs. The company has also pulled TXM out of the Czech market, where revenues were not sustainable.

New people, new opening

The company appointed Marcin Gregorowicz the president of the group, as well as Agnieszka Smarzyńska, who has been appointed managing director responsible for retail sales. “We hope that the company will spread its wings under the new management. We can see significant improvement potential in our results for subsequent periods,” said Bogusz Kruszyński. The turnover of the group amounted to PLN 283.6 mln in H1 – 0.7 pct lower than in the same period in 2016. Its retail margin increased by PLN 3 mln to app. 43.5 pct. At the end of H1, the company had an operating loss for the year so far of PLN 14.1 mln, whereas in the same period a year ago it lost PLN 1.1 mln. As far as its total result is concerned, the company suffered a loss of PLN 15 mln, having lost PLN 2.9 mln a year earlier. Meanwhile the total loss attributable to the shareholders of the parent company amounted to PLN 9.3 mln – twice as bad as in H1 2016.

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