Annual Report 2007/2008 Contents
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Annual Report 2007/2008 Contents THE YEAR IN BRIEF 1 CEO'S STATEMENT 2 STRATEGIC ORIENTATION 4 NEW MARKETS 8 MARKET OVERVIEW 10 SUSTAINABLE DEVELOPMENT 14 Committed and knowledgeable staff – the core of the Clas Ohlson brand 14 Our social responsibility and human rights efforts 18 We take responsibility for the environment 20 OPERATIONS 22 Sales channels 22 The brand and our marketing 26 Product range and purchasing 28 Own brands 31 Logistics and IT 32 Risks and factors of uncertainty 34 SHARES AND SHAREHOLDERS 38 ANNUAL REPORT Directors' report 42 Five-year summary 46 Comments on the five-year trend 47 Consolidated income statement and cash flow statement 48 Consolidated balance sheet and change in equity 49 Parent Company income statement and cash flow statement 50 Consolidated balance sheet and change in equity 51 Accounting policies and notes 52 Certification of the annual accounts 64 CLAS OHLSON IN BRIEF Audit report 65 Clas Ohlson is a retailing company with sales in CORPORATE GOVERNANCE 66 Sweden, Norway and Finland. At the end of the year Internal control 68 there were 86 stores, and home shopping. We offer a broad range of products in the areas of BOARD OF DIRECTORS 70 electrical & electronics, mobile phones, computer SENIOR MANAGEMENT 71 accessories, hifi/stereo, tools, household, home and QUARTERLY RESULTS 72 storage. We have around 15,000 different products DEFINITIONS 72 in our range. The company is listed on the Nordic ADDRESSES 73 Exchange. The head office and distribution centre are located in Insjön in Sweden. Our sales exceed SEK 4.5 billion and we have a total of around 3,000 employees. There are plans to open our first stores in the United Kingdom in 2008/09. THE WORLD of CLas OHLson NORWAY SWEDEN UNITED KINGDOM Fore a more detailed description of our stores and their locations, see our website www.clasohlson.se The interim reports for 2008/09 will be published on AnnUAL GENERAL MEETIng the following dates The Annual General Meeting for the 2007/08 financial year will be First quarter (May-July) 9 September 2008 held on Saturday 13 September 2008 in Insjön. Notice will be sent Second quarter (Aug-Oct) 5 December 2008 to all shareholders registered at the end of July 2008. Notice of Third quarter (Nov-Jan) 11 March 2009 the meeting can also be found on our website www.clasohlson.se Year-end report 2008/09 11 June 2009 under Financial information – Group. The notice contains an agenda and information on how to register to attend. The Board has decided to propose to the Annual General Meeting that a dividend of SEK 5.00 per share be paid for 2007/08 (previous year SEK 4.50). Clas Ohlson AB (publ), corporate identity number 556035-8672 Annual report 1 May 2007 to 30 April 2008. SWEDEN NORWAY Borås Arendal Eskilstuna Bergen, Bergen Storsenter Gävle Bergen, Laguneparken Göteborg, Bäckebol Bergen, Sartor Göteborg, Nordstan Bergen, Åsane Göteborg, Partille Fredrikstad Halmstad Gjøvik Helsingborg Hamar Insjön Haugesund Jönköping Kristiansand Kalmar Lørenskog Karlstad Moss Kristianstad Oslo, Alna Senter Kungsbacka Oslo, Oslo City Linköping Oslo, Torggata Luleå Porsgrunn Malmö Sandnes Norrköping Sandvika Nyköping Sarpsborg Piteå Ski Skellefteå Skien FINLAND Stockholm, Farsta Stavanger, Kilden Stockholm, Gallerian Stavanger, Madla Stockholm, Haninge Strømmen Stockholm, Häggvik Trondheim, City Syd Stockholm, Kista Trondheim, Lade Stockholm, Nacka Trondheim, Solsiden Stockholm, Sickla Tønsberg Stockholm, Skärholmen Ålesund Stockholm, Solna SWEDEN NORWAY FINLAND Stockholm, Täby FINLAND Stockholm, Vällingby Espoo Stockholm, Väsby Helsinki, Kamppi Number of stores 45 29 12 Sundsvall, Birsta Helsinki, Mannerheimintie Sundsvall, Inre Hamnen Helsinki, Itäkeskus Trelleborg Kokkola Uddevalla Kuopio Share of Group sales Umeå Lappeenranta Uppsala Lempääla Visby Tampere Västerås Vantaa Share of Group number of Växjö Vaasa employees Örebro Turku Örnsköldsvik Year started 1918 1985 2002 Östersund The story of Clas Ohlson Clas Ohlson, who was very interested in technical products, started the company in Insjön in 1918 as a mail-order company. The product catalogue, which at that time only ran to a few pages, was gradually expanded and over the years has been a source of inspiration for generations of customers. The company has since grown year by year, and Clas himself was active in the business throughout his life. The year in brief • Sales totalled SEK 4,662m (SEK 4,101m) Sales, SEKm �,��� • Net profit totalled SEK 422m (SEK 386m) �,��� �,��� �,��� Earnings per share SEK 6.43 (SEK 5.88) �,��� • �,��� �,��� Dividend of SEK 5.00 (SEK 4.50) per share is proposed �,��� • �,��� • Fifteen new stores opened �,��� � • Preparations for launch in the United Kingdom ��/�� ��/�� ��/�� ��/�� ��/�� • Decision to establish purchasing company in Asia Operating profit, SEKm Operating margin, % ��� ��� �� ��� Key ratios 2007/08 2006/07 Change ��� ��� �� ��� Net sales, SEKm 4,662 4,101 14 % ��� ��� �� Operating profit, SEKm 578 531 9 % ��� �� Pre-tax earnings, SEKm 588 538 9 % ��� �� Net profit, SEKm 422 386 9 % ��� � Operating margin, % 12.4 12.9 -0.5 � � ��/�� ��/�� ��/�� ��/�� ��/�� Return on equity, % 29.4 29.4 0.0 Return on capital employed, % 41.0 40.9 0.1 Equity/assets ratio, % 68.4 70.6 -2.2 Earnings per share, SEK 6.43 5.88 9 % Dividend per share, SEK 5.00* 4.50 11 % Total number of stores 86 71 21 % Number of full-time equivalent employees 1,801 1,647 9 % * Proposed dividend C LAS O H LS O N 2007/08 The year in brief 1 CEO's statement Another record year and major plans for the future Since it was founded more than 90 we do is solve the little practical problems in increasingly competitive market. We are years ago, Clas Ohlson has undergone everyday life in a convenient way. This creates establishing a purchasing office in Asia and enormous development in terms of a sense of satisfaction. We do this with an reviewing our suppliers and manufacturers to operation, organisation and finance. affordable, broad product range with a high find the best possible partners to work with. Our success has been based on find- level of service through knowledgeable and 'Best' means working with those who develop ing the way into customers' hearts and helpful staff, and we do it by being in places good products at attractive prices, but who attracting a share of their retail spend- our customers frequent in their daily lives. also treat their staff and the environment with ing. We firmly believe that Clas Ohlson The fact that we additionally offer clever, respect. We are expanding our distribution is one of the few retailing companies rather ingenious products or solutions provides centre in Insjön in Sweden to cope with the to have what it takes to become the inspiration and makes shopping at Clas Ohlson increased flow of goods. This will enable us next major Swedish export success. fun, which is an important factor in continuing to make efficient deliveries to at least 150 We have therefore marked out the our success story. stores. We highlight and coordinate issues in first stage in our European expansion, From this point of view we have looked the Group in order to simplify and make sure while reviewing how we can develop long and hard at how we can develop the that we are cost-effective in everything we do. and improve in existing markets. Just as company and make it even better. We already With this in mind we have recruited a chief the step from mail order to a chain of achieve high sales in our stores, but the sales operating officer, a marketing director and a stores required us to change the way figures can be increased still further. We have information and IR director. we operate, the steps we are taking reviewed both the big things and the little things to strengthen our competitiveness and Developing the organisation now will make it possible and neces- develop further. We have defined our future This recruitment also belongs to the third area sary for us to do things in a new way. strategy under three headings. – preparing the organisation for the European venture. While cherishing our origins, we Understanding the magic Growth with clearer positioning are now developing the skills needed in an During my first year I have devoted much of We will expand into new markets to maintain international retail chain. We are familiaris- my attention to gaining an understanding of strong long-term growth. Our entry into the ing ourselves with new markets and analysing the strengths of Clas Ohlson and discover- United Kingdom creates great opportunities what is "universal" in what we do and how ing the magic formula. My intention was to and represents a first step outside the Nordic the Clas Ohlson spirit should be interpreted in acquire a deep understanding of this magic, Region. Growth will also be generated in other countries. For the Clas Ohlson Academy as it is the basis of our business and what we our existing markets through clearer market the move into Europe poses completely new We will make sure that Clas Ohlson remains are building our future on. I feel that this positioning. The best time to speak to our challenges – having previously trained new staff a company that breaks the mould. is particularly important for us now, when customers is when they are shopping. We who already know all about us, the Academy When I was on my way home in March more and more companies are competing for are developing a new store concept to make will now have to contribute to creating the Clas from one of the year’s 15 store openings – this customers' attention. We are also in the process it easier for our customers to find their way Ohlson spirit among future staff who have time in Visby on the island of Gotland – I was of introducing Clas Ohlson to new markets around our stores.