annual report Always good service and excellent customer care at Clas Ohlson 5 markets 7.3 billion SEK in sales Meet the people 15,000 products behind the brand 4,700 employees CLAS OHLSON ÅRSREDOVISNING 2014/2015 1 Clas Ohlson is a Swedish company and is subject to Swedish law. All values are stated in Swedish kronor (SEK). Values in millions of SEK are abbreviated Clas Ohlson AB, SE-793 85 Insjön, Sweden MSEK and thousands of SEK as SEK 000. Unless otherwise specified, figu- Tel: +46 247 444 00, e-mail: [email protected] res in parenthesis pertain to 2013/14. Data regarding markets and competi- tion reflect Clas Ohlson’s own assessments if a specific source is not quoted. Registered office: Insjön, Sweden These assessments are based on the best and most recent factual data from Corporate Registration Number: 556035-8672 published sources in the public sector and the consumer goods industry. 2 CLAS OHLSON ÅRSREDOVISNING 2014/2015 Contents This is Clas Ohlson 4 The year in brief 6 CEO’s statement 8 STRATEGIC ORIENTATION Operating framework 10 Targets and target fulfilment 12 Strategic focus areas 14 Prioritised areas for sustainability efforts 16 BUSINESS ENVIRONMENT AND MARKET Business environment trends 18 Market development 20 OPERATIONS Our business model 22 Our customer offer 24 Customer interaction 28 Expansion 32 Supply network 36 Our ways of working 38 Our people 40 ANNUAL REPORT Directors’ Report 44 - Proposed allocation of earnings 47 - Risks and uncertainties 48 - Corporate governance 52 - Board of Directors and auditors 60 - Senior management 62 Consolidated financial statements 64 Parent Company financial statements 67 Notes 70 Certification of the Annual Report 84 Audit report 85 Sustainability report The share 86 Clas Ohlson applies a long-term and integrated approach to Quarterly data 90 sustainability issues to create value and a favourable customer Key ratio definitions 91 offering, and do good business. The company’s 2014/15 Ten-year overview 92 sustainability report is available at about.clasohlson.com. History 94 Store overview 96 Annual General Meeting and This Annual Report has been prepared in Swedish and translated into English. reporting calendar 97 In the event of any discrepancies between the Swedish and the English version, the former shall have precedence. Glossary 98 CLAS OHLSON ANNUAL REPORT 2014/15 3 THIS IS CLAS OHLSON Almost 100 years ago, when Clas Ohlson founded his mail order company in Insjön, he stated, “We will sell dependable pro- ducts at low prices and with the right quality according to need”. For all intents and purposes, we follow the same maxim today. A strong offering and dedicated employees Through our vision of developing Clas Ohlson into a leading international modern hardware retailer, with high profitability we add value for all our stakeholders. Our business Our core values We help and inspire people to improve their everyday life by Our strong core values are the compass for all work conducted offering a broad range of practical products at attractive prices, by the Group and the guiding principle for how we approach a proactive, knowledgeable and available customer service, and and communicate with each other, our customers, suppliers an inspirational shopping experience through all sales channels. and society at large. Salesmanship is the core of the Clas Our operations must be sustainable and respect people and the Ohlson spirit and rests on four cornerstones: drive, warmth, environment. innovation and commitment. You can find us here • We are located in Sweden, Norway, Finland, the UK and 5 markets Dubai through a well-distributed store network comprising 198 stores and online shopping as well as in China with our 7.3 billion SEK in sales own purchasing offices. Starting in summer of 2016, we will also establish operations in the German market. • The major portion of our store network is located in city 15,000 products centres or centrally located in popular shopping centres. • The aim is to offer fully integrated sales channels that work together throughout the entire shopping process, known as 4,700 employees an omni-channel structure. 76 million visitors 198 stores 4 CLAS OHLSON ANNUAL REPORT 2014/15 THIS IS CLAS OHLSON The results in brief Sales up in all markets Key ratios We have increased our sales in all markets and through all 2014/15 2013/14 change, % sales channels. Sales grew to 7,330 MSEK, corresponding to Net sales, MSEK 7,330 6,808 8 a sales increase of 8 per cent in local currency. Sales in com- Operating profit, MSEK 596 531 12 parable units rose 2 per cent. Profit before tax, MSEK 597 530 13 Increased profitability Profit after tax, MSEK 459 405 13 Operating profit increased 12 per cent to 596 MSEK during Operating margin, % 8.1 7.8 0.3 p.p. the year. Operating margin increased 0.3 percentage points Return on capital employed, % 29.3 28.0 1.3 p.p. to 8.1 per cent. Earnings per share increased 13 per cent to Return on equity, % 22.5 21.7 0.8 p.p. 7.27 SEK. Equity/assets ratio, % 57.3 58.3 -1.0 p.p Continued expansion with stores and concepts Earnings per share before dilution, SEK 7.27 6.42 13 During the financial year, 13 new stores (11) were opened, Dividend per share, SEK 5.251 4.75 11 two in Sweden, nine in Norway and two in Finland. We Number of full-time equivalent 2,736 2,629 4 introduced Clas Office, our offering to corporate customers, in Sweden and Norway and are also launching our customer 1 Proposed dividend loyalty program Club Clas in Finland. Sales, MSEK Operating profit, MSEK Operating cash flow, MSEK 965 596 561 7 330 531 6 808 507 6 519 6 260 431 689 5 828 647 518 350 10/1111/12 12/13 13/1414/15 10/1111/12 12/13 13/1414/15 10/11111/12 2/13 13/1414/15 Return on capital employed, % Earnings per share, SEK Dividend per share, SEK 7.27 1 28 28 29 6.42 30 6.29 25 5.71 5.23 23 5.25 4.75 4.25 20 4.25 3.75 10 10/1111/12 12/13 13/1414/15 10/11111/12 2/13 13/14 14/15 10/1111/12 12/13 13/14 14/15 1 Proposed dividend CLAS OHLSON ANNUAL REPORT 2014/15 5 THE YEAR IN BRIEF The world’s first eco-labelled A year of tea lights Clas Ohlson is now able to offer its high energy customers a modern and sustainable alternative to traditional tea lights. When the tea light has burnt out, the glass Customer experience of the year holder is refilled with a new tea light. Our customer care received recognition and Clas Ohlson was given The tea light has received a Nordic Swan the 2014 Best Customer Experience award at the Nordic eCom- ecolabel. merce Summit. The assessment included the website, marketing and customer service. The jury’s motivation was, “Clas Ohlson ensures the customer has a positive experience throughout the whole purchasing process and with its knowledgeable staff, it is a pleasure to shop there.” Launching our range of paints We are introducing paint for walls, ceilings, radiators and gloss paint in the product range, Introduction of Clas Office which is something that has long in Sweden and Norway been in demand with customers. Our many loyal corporate custo- The paint has been subjected mers, large and small, have helped to extensive testing and passed us design a simple corporate con- with extremely favourable re- cept that meets the special needs sults, it is also eco-certified and of an office environment and facilita- marked with an EU Ecolabel. tes purchases and administration. Q1 Q2 • Eco-labelled paint launched as part of product range • Introduction of the Clas Office corporate concept in • Our customer care received recognition and we won Sweden and Norway the 2014 Best Customer Experience award • Club Clas was introduced to Finnish consumers • Club Clas loyalty program passes the one million mark • The world’s first eco-labelled tea lights were launched • New store in Levanger in Norway • New stores in Oslo, Slependen, Bergen and Orkdal in Norway and in Pori and Hämeenlinna in Finland 6 CLAS OHLSON ANNUAL REPORT 2014/15 THE YEAR IN BRIEF Focus on long-term sustainability Our focus on long-term sustainability in the supply chain received considerable attention. During the financial year, we have increased the share of rail freight Our proprietary brands are growing and, today, 41 per cent of overland Our proprietary brands account for more freight goes by rail. than 25 per cent of sales and provide customers with a wider choice as well as a level of affordability and quality that exceeds expectations. The new Coline range offers high-quality, trendy kitchen equipment at extremely advantageous prices. New stores in the Nordic region During the quarter, we opened Recycling campaign four new stores in Norway and As part of our sustainability efforts, Sweden. During the financial we offer customers the possibility of year, we opened a total of 13 returning used ink and toner cartrid- new stores in Sweden, Norway ges to the stores. and Finland. In this manner, we prevent the pro- Återvinn dina ducts from ending bläckpatroner i butiken och få up among house- pengar tillgodo hold waste and, thereby, contribute to increased recy- cling and a more Är du Club Clas- eller Clas Office- medlem får du 10 kronor tillgodo sustainable lifestyle. på en bläckpatron och 20 kronor för en tonerkassett. Alla märken återvinns, lämna bara patronerna till oss vid servicedisken eller i kassan.