Bokusgruppen Interim Report January–September 2023

Comments from the CEO

Drastically improved earnings due to continued strengthening of gross margin

The gross margin improved by 3.1 percentage points during the third quarter, which led to an EBITA of MSEK 23.5, a 57.8% increase compared with the year-earlier quarter. Stores increased their sales again in this quarter and the market share they have captured during the year are proof of their strength.

Akademibokhandeln Stores increased net sales 4.0% over the year-earlier quarter. This is a satisfactory increase and a clear indication of the success of the Akademibokhandeln brand. Our stores attracted many customers during the summer who were looking for entertainment in the form of reading, board games, jigsaw puzzles and so on.

Stores also performed well in terms of promoting Bokus Play. Many customers like having an audio book subscription as a supplement to reading the printed books they purchase in stores, as well as the advantages that come with a Bokus Play subscription when shopping at Akademibokhandeln.

The online channels posted negative sales trends during the quarter. Net sales in Bokus Online decreased 8.3% compared with the year-earlier quarter.  However, it is worth noting that digital books had an overall sales increase of 8% due to higher growth for the Bokus Play subscription service.

Within Akademibokhandeln Online, we have actively prioritised profitability by not offering discounts on course literature to the same extent ahead of the start of the academic year. This led to a strong gross profit for the segment, but had a negative impact on sales. The major autumn sales campaign also began a week later than the previous year, which had an impact on sales for the quarter since those sales will be recognised in October. Net sales in Akademibokhandeln Online decreased 3.6%.

Strengthened margins and cost focus

By continuing to focus on price optimisation and supplier negotiations, we achieved a strong gross margin in all segments. The gross margin increased by a total of 3.1%, which generated an increase of a full 6.7% in gross profit. In parallel with increasing our gross margins, we have also worked hard to keep fixed costs down. Thanks to a restructuring programme for the office organisation and staffing optimisation in stores, we have managed to keep personnel expenses down despite higher than average costs for this year’s salary reviews. We also carried out difficult negotiations with landlords to offset high rent increases resulting from indexation in an inflationary environment. As a result, we were able to partially offset the effect of the major increases in rent that were introduced during the year. Our marketing initiatives decreased somewhat during the year and there has been an overall level of restraint in terms of costs.

The increased gross profit and stable fixed costs led to an increase of MSEK 8.6 in EBITA, a full 57.8%, compared with the year-earlier quarter.

Important initiatives to promote reading

I’m proud that during the quarter we were able to launch several initiatives to promote reading, which is an important part of our sustainability agenda. Akademibokhandeln sent out 2,000 Läsborgarmärket teacher kits to primary school teachers across Sweden. Läsborgarmärket is a very popular tool for sparking student interest in reading.

For the second consecutive year, Bokus awarded the Bokus Scholarship for students who promote the joy of reading. In 2023, the scholarship was awarded to Adam Gustafsson, a student who developed an app concept to promote reading printed books.

Outlook

In addition to investments to generate sales growth, we will also work to strengthen our gross profit and keep costs down. Index clauses for store rent and higher salary reviews than normal will also be a reality for us next year, which means that we need to continue to optimise, streamline and negotiate in order to deliver profitable growth.

Our full focus is now entirely on delivering a strong fourth quarter – the quarter that is essential for Bokusgruppen to have a strong full year. We have excellent conditions for success, despite an increasingly challenging operating environment. Customers have indicated that they will continue to prioritise shopping with us despite less disposable income. This year, books, board games and jigsaw puzzles could also become more relevant and replace more expensive Christmas gifts.

In conclusion, I’d like to remind all of our shareholders that on 15 November, we will pay out the second portion (SEK 1.5 per share) of this year’s total dividend of SEK 3 per share. This is an excellent dividend yield on our share.

Maria Edsman, CEO