Ukraine crisis drags Redan results down

According to the company, the situation in Ukraine and currency fluctuations are to blame for the poor figures. Redan reported PLN 6.91 mln of consolidated net loss attributable to shareholders of the parent company compared to a loss of PLN 2.08 mln a year earlier. This was the case despite the fact that its consolidated sales revenue amounted to PLN 103.66 mln compared to PLN 97.65 mln in Q1 2013. Redan’s weaker results were down to its fashion segment and the worsening situation beyond Poland’s eastern border. In Q1 the total operating result of the Redan group fell by PLN 4.3 mln – a consequence of currency exchange differences from the calculations of the reports of its foreign subsidiaries, the change in which amounted to PLN 5.6 compared to the previous year. This is mainly the result of the weaker Ukrainian hryvnia and, to a lesser extent, the Russian ruble, the company explains. According to the assessment of the management board, the results of the fashion segment are showing the first effects of the product changes that have been implemented, even though in Q1 they were hidden by the negative results of its Ukrainian operations. The company has informed us that its operations in Ukraine remain undisturbed otherwise. Out of its three shops in Crimea, which were operating before the separation of ‘the Autonomous Republic of Crimea’, one is still supplied by its Ukrainian company whereas two others buy goods form Redan Moscow – Redan’s subsidiary based in Moscow. According to Redan’s management board, if the situation does not escalate further, they will not consider withdrawing from the country. In Q1 its sales in Ukraine constituted 13 pct of the revenue from the fashion segment for the entire Redan group. This represents a decrease compared to a 19 pct share in Q1 2013. Despite a difficult market situation, the on-line store that operates in Ukraine had a y-o-y increase of sales of 70 pct when calculated in hryvnia and 34 pct if calculated in złoty. Meanwhile, the discount segment of the group has been doing rather better. In Q1 2014 the TextilMarket chain generated EBIT of PLN 1.1 mln. The result is 3.5 mln better than last year’s. At the end of April the subsidiary also opened the first internet discount shop in the country. Even though its share in total sales in the first period will not be high, taking into account the performance of the fashion segment a dynamic increase of turnover is expected. Apart from the opening of a few stores in Poland, the TextilMarket chain is also preparing for the launch of its first few outlets elsewhere abroad. The first shops in the Czech Republic and Slovakia are to be opened in 2014. In the next few years its development plans will be extended to other countries.