Bokusgruppen AB Interim Report January - June 2022
22 Jul, 2022, 12:09
Comments from the CEO Maria Edsman:
Sales increased 2.1% during the quarter, driven by strong sales in stores. The return to stores from online shopping continued and, generally speaking, consumer behaviour is back to what it was before the pandemic. Gross margins improved in all segments and also benefited from the recovery in stores. Adjusted for items affecting comparability, however, EBITA was still lower than the previous year. During the quarter, the planned move to a new logistics partner for e-commerce was completed and an important piece of the puzzle for Bokusgruppen’s customer offering has now fallen into place.
We are pleased to note that the second quarter posted year-on-year sales growth of 2.1%. This was driven by the Akademibokhandeln Stores segment, where sales are now approaching pre-pandemic levels despite a smaller number of stores. Sales in stores increased 16.0% during the quarter and a cumulative 12.2% this year.
The gross margin improved in all segments, but especially in online channels. A larger share of sales in stores was also a contributing factor. This is a sign of strength in a time when the purchase prices for many items are rising, which means that we need to offset these by selectively increasing consumer prices.
Brand initiatives for Bokus and Bokus Play as well as other initiatives to strengthen our e-commerce offering continued during the quarter. Our personnel costs for stores also increased in order to meet growing customer streams. Adjusted for items affecting comparability, primarily in the form of pension refunds of approximately MSEK 26.3, EBITA amounted to MSEK -21.6, a year-on-year decrease MSEK 4.3.
Earnings for the year’s second, and smallest, quarter are usually negative due to our normal seasonal variations, with lower profitability during the first quarter and improving towards the end of the year.
The adjusted operating cash flow improved by MSEK 33.2 over the previous year, largely attributable to the pension refunds. The adjusted operating cash flow amounted to MSEK -42.8. The negative cash flow is in line with our seasonal variations.
New logistics partner – an important milestone
The most important event during the quarter was the planned move to Almroths, our new e-commerce logistics partner. The actual relocation of stock was carried out during the end of the quarter and was overall successful. Eventually, it will entail an even better level of service and the opportunity for us to meet customers’ new needs and increased expectations.
Upswing for stores and general slowdown online
It is very gratifying that customers have now found their way back to our stores and that they remain a relevant meeting place. During the quarter, there was a great deal of focus on presents for all of the springtime events and holidays that could be held without restrictions this year. Author meet and greets are once again underway, with around 150 such events held during the quarter.
Swedish e-commerce saw a clear decline in the spring, after the pandemic. Bokusgruppen is no exception, but we can note that the downturn in our online channels appears to have slowed compared with the preceding quarter. Online sales are actually at a significantly higher level than before the pandemic, approximately 17% higher than the second quarter of 2019.
Successful investments in stores
Stores have worked to tie their offerings with Bokus Play in a unique and successful way in an effective summer campaign. Our customers were previously more loyal in terms of their channel for purchasing and consuming books, while today we can see that more of them are moving freely between buying in stores and online, and consuming digital books through subscriptions. As a part of developing our store offering, we have now rolled out self-checkouts in seven stores. This allows customers to choose whether they want personal service or a fast payment solution they can carry out themselves.
Sustainability – an investment in the future
We have continued our sustainability work on a broad front, including in the area of reading promotion. Akademibokhandeln’s stores participated in an industry-wide reading promotion initiative called Världsbokveckan (World Book Week), where school classes were invited to visit stores. We also had book exchange days in a select number of stores, a circular and sustainable initiative that will be expanded further in the autumn.
Together with our new logistics partner Almroths, we intend to gradually achieve more sustainable e-commerce deliveries.
Continued investments in marketing and brands
During the quarter, we continued to strengthen the Bokus brand with the “För livets alla bokstunder” initiative, which included Bokus and Bokus Play. In a partnership with TikTok, Bokus also introduced an initiative to promote reading among young people. The hashtag #Bokstället has, in only a few weeks, already reached 5.9 million views.
We find ourselves in an uncertain global situation, not least with a terrible war that is continuing to wreak havoc on Ukraine and create turbulence in the rest of Europe. We can note that higher prices for energy and raw materials are affecting us and that higher interest rates and inflation are reducing our customers’ disposable income. This situation will continue to affect our operations to a certain degree. Most notably in the form of higher energy costs in stores, more expensive logistics and higher purchase prices. A strong focus in the coming quarter will be to offset these cost increases in various ways. Today, we see no signs that demand for books will be significantly affected by increased prices or decreased disposable income. Historically speaking, people who enjoy reading will continue to purchase books during difficult economic times.
The large swings we have seen in major channels in the last two years is a result of the pandemic waves that swept society, so we are preparing ourselves for what an eventual increase in the spread of the virus in autumn 2022 might entail. However, these drastic shifts make it clear that Bokusgruppen is well equipped to handle an uncertain and constantly changing operating environment, since we can offer the joy of reading to everyone regardless of how they choose to purchase and consume books.
Despite the clouds on the horizon, we look forward to the strong sales and earnings of the autumn months. We are pleased that we can now meet our customers without any limitations, even in stores, and provide personal service and guidance towards pleasant reading experiences. And with our new logistics solution in place, we can provide an even better and smoother customer experience to those who choose to shop online.
After a well-deserved vacation for our employees, a bookish autumn is approaching with exciting news, a variety of author meet and greets in our stores, and – of course – the return to schools and universities, where our “Skriva Spela Skapa” product range and course literature will take centre stage.
Maria Edsman, CEO