Bokusgruppen AB Interim Report January - March 2023
4 May, 2023, 16:14
Comment from the CEO Maria Edsman:
Increased sales and significantly improved earnings
Bokusgruppen started the year with increased sales and a successful annual national book sale. In parallel with this, we continued to adjust the prices we charge customers in order to compensate for cost increases. This resulted in improved gross margins and increased gross profit. Focus has also been on cost reduction. These initiatives led to a historically strong performance for a first quarter.
The annual national book sale was an engine of sales growth during the first quarter. This was reflected in significantly better sales figures than in the previous year. The sale remains extremely relevant for our customers and for us as a company – a well-established celebration of reading that shows no signs of slowing down.
We saw the largest growth in Akademibokhandeln Stores, where sales increased 8% compared with the year-earlier quarter. In addition to a successful book sale, we also saw positive increases for our creative range “Skriva Spela Skapa.”
Akademibokhandeln Online also continued to improve during the quarter, with growth of 8% compared with the previous year. The positive trend in both of these channels indicates the strength of the Akademibokhandeln brand, which is preferred by many existing and new customers. Fortunately, they are continuing to shop with us after the pandemic, meaning that we have captured market share.
In parallel with continued in-store customer traffic, we saw a downturn for Bokus Online. This was in line with the overall online shopping market, which is continuing to see a negative trend. Sales declined 8% in the quarter despite a successful annual national book sale. The price-sensitive student segment also declined during the quarter.
The comparative figures for the year-earlier quarter are still affected by the shift in channels during the pandemic. Starting next quarter, the pandemic will no longer be a factor in comparative figures.
During the quarter, we continued our intense efforts to offset cost increases by selectively raising prices. This led to higher gross margins and increased gross profit in the quarter for the Group as a whole. This was a historically strong performance for a first quarter.
An agile organisation
Bokusgruppen is an agile company with an organisation that can quickly adapt to difficult times. Thanks to this, we successfully offset nearly all of our inflation-driven costs, such as rent and electricity costs.
The previously announced reorganisation also took place during the quarter. This led to a reduction of ten roles at our offices. A pared-down organisation will require us to be even more efficient going forward. The effect of the downsizing will be reflected in earnings starting in the second quarter of this year.
Continued investments in our IT transformation and online shopping logistics
The ongoing IT transformation, which includes an upgrade of essentially all of our systems and platforms, continued during the quarter. Focus right now is on our new online shopping system. This will provide our customers with a better shopping experience and streamline our own work. This transformation is fundamental for our continued competitiveness. The investment level in the quarter was higher than in the previous year, but for the entire year we expect it to decrease.
The work with automation solutions within the framework for our new logistics system also continued during the first few months of the year. We expect this to be finished around the middle of the year. The solutions will streamline our internal processing and, eventually, improve lead times to customers. They will also have a positive effect on our sustainability targets by improving the resource efficiency of our packaging solutions.
Updated store at Frölunda Torg
As a part of continuously revising our store network, we renovated our store at Frölunda Torg during the first quarter and opened the doors to a more modern experience. The store is one of our larger stores in the Gothenburg area. We can now offer our customers an optimal purchasing experience through a mix of in-store employees and the digital opportunities that make the customer journey both simple and adaptable.
Sustainability work continues
Our sustainability work is integrated into our operations and every day we take small but important steps to achieve our sustainability targets and drive change that leads to the lowest possible environmental impact – and the greatest possible positive impact.
During the quarter, we began accepting applications for the Bokus Scholarship, and we look forward to the large number of applications we hope to see this year as well. Reading Promotion is our unique opportunity to make a difference in a reading, democratic society.
The first quarter showed strong positive tendencies in terms of sales, cost savings and earnings. These are good indications that books and creative material are purchases that are prioritised even in times when people need to review their spending. With that said, there is still a great deal of uncertainty regarding customer purchasing power. More interest rate hikes are expected, and the conversion of fixed-rate loans to loans at significantly higher variable rates will put further pressure on our customers’ finances. At the same time, our business also has higher costs, with index-linked rent as well as negotiations expected to lead to an increase of 4% in salary costs for 2023. Unfortunately, there is no end in sight for the war in Ukraine, which continues to wreak havoc and leave uncertainty in its wake. Our approach to the prevailing international conditions is therefore to remain cautious in terms of costs and to continue to invest in prioritised business development. We have managed to adapt our costs and remain dedicated to spreading the joy of reading to everyone, every day!
Maria Edsman, CEO