Increased investments delivers UK market growth at Magnet

Swedish kitchen furniture group Nobia, owner of UK brand Magnet, has reported a double-digit growth in its UK division.

According to its latest trading update, group net sales increased to SEK 3,480m (3,215), with organic sales growth of 4%. Operating profit decreased to SEK 78m (228), while pre-tax profit amounted to SEK 19m (170).

In the UK, Magnet retail performed well with double digit growth, whilst kitchen sales in Magnet trade were flat and project sales declined. Retail growth, through the strengthened Magnet proposition, contributed to a favourable segment mix and a gross margin in line with last year despite the high direct material cost headwind.

Net sales in the UK region increased to SEK 1,240m (1,185). Operating profit decreased to SEK -11m (SEK 44m).

Jon Sintorn, President and CEO, commented on the UK: “During the quarter we increased our investments in sales driving activities such as kitchen design capacity and store network improvements which are intended to improve our position ahead of the winter-sales season starting in December.

“At the same time we are addressing our fixed overhead by executing on the cost-out programme launched in the second quarter. However, given current profitability we are not ruling out further cost saving measures in the region.”

The cost reduction program that was launched in the second quarter impacted by approx. SEK 15m.

“Sales grew organically in all our regions in the period, predominantly driven by higher average order values. However, operating profit declined as continued inflationary pressure, challenges in the Nordic supply chain and investments in UK sales initiatives all rendered higher costs. With profitability below our targets, we preannounced our results and will carry out further measures to address fixed overheads across the Group,” Jon added.

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