JOHAN ÅBERG, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ANSWERS QUESTIONS ON THE PAST YEAR (2011/2012)

“INTENSIVE EFFORTS TO BECOME THE KAPPAHL WE WANT OUR CUSTOMERS TO MEET”

“INTENSIVE EFFORTS TO BECOME THE KAPPAHL WE WANT OUR CUSTOMERS TO MEET.”
WHAT WAS MOST IMPORTANT DURING THE YEAR?
The determined efforts with our action plan. When I started here it was clear that a number of measures were needed to regain market share and turn loss to profit. So we launched an action plan in early 2012. Since then there have been intensive efforts to achieve its success. From what I have seen so far I am very pleased. At the same time everyone is aware that we need to continue our work.

WHAT DOES THE ACTION PLAN INVOLVE IN PRACTICE?
The plan includes specific activities in priority areas that have a direct impact on our sales and profitability. These include the assortment, the offer and our communications. We have already started to see clear effects of the activities we have implemented all the way from design and assortment to our communication concept and store operation.

CAN YOU MENTION ANY ACTIVITIES THAT ARE INCLUDED IN THE PLAN?
We have conducted the largest customer survey ever in the history of the company. In that way we have gained a clear picture of who our customers are and their attitudes to fashion. Our entire operations are based on this knowledge. It  has led to a new assortment strategy and changes in central parts of the organisation. We have also introduced an entirely new communication concept that shows our customer offer more clearly. In addition, we have upgraded all stores, lifted them to a new level, making it simpler and more inspiring for customers to find the right fashion with us.

WHAT ARE YOU MOST PLEASED ABOUT?
There is a genuine willingness to produce good results at KappAhl. This has contributed to us being able to create in a short time an organisation and a KappAhl that we want our customers to meet. I am also pleased that we are reporting a better operating profit in the final quarter than the previous year, have a satisfactory inventory situation and have succeeded in achieving the target of SEK 150 million in our savings package.

CAN THE PACE OF THE ACTION PLAN BE INCREASED EVEN MORE?
The pace is high – we have almost had to hold back a bit. The reason we can maintain the high rate of change is largely due to us concentrating on a few clearly defined areas, but is also due to the high level of commitment here. As we now gradually achieve the targets set we are reviewing other areas for improvement.

HOW IS THE RATE OF EXPAN SION AFFECTED BY THE PLAN?
It is important to remember that KappAhl is a growth company and that the longterm expansion target of opening 20–25 stores per year remains. However, the tough market situation and our current position have meant a temporary slowdown in the rate of expansion. For example, this year we opened 19 stores.

HOW HAVE ONLINE SALES DEVELOPED?
We have offered online sales in Sweden since autumn 2011. This has been very positively received. There is a strong increase in sales and the goal is to continue expansion in this area.

WHY IS SUSTAINABILITY WORK IMPORTANT FOR KAPPAHL ?
It is necessary to deal with many of the central social challenges that face us – from both a business and of course also a personal perspective. For us as a company this means the availability of raw materials, transport and competency and the impact on society of our operations. Taking the sustainability perspective into consideration throughout the chain from raw materials to products strengthens our offer. In that way, the work of sustainability becomes important from a purely business strategy perspective, and something that we must deal with responsibly. In addition, the work of sustainability energises the people who work here – it is positive to be part of a company that contributes to a solution to long-term challenges.
YOU HAVE AN ONGOING RIGHTS ISSUE AND ARE SELLING A PROPERTY, WHY?
The rights issue and sale of the head office and distribution centre property mean a capital infusion of about SEK 850 million. This will be used to pay off debt and thus create a stronger balance sheet – which will contribute to increased stability in the continued work of improvement.

WHAT WILL KAPPAHL OF THE FUTURE BE LIKE?
We will be much stronger than when we started the action plan. We will have an effective and efficient organisation with smoother processes and a clearer offer, thanks to the changes made. When volumes increase, profitability is positively affected. We will have a presence on more markets and we will have increased our market share.

WHAT WILL YOUR PRIORITIES BE NEXT YEAR?
We are focusing on three things; continuing to develop the assortment, increase sales and at the same time strengthen profitability. We will work in all three areas in a balanced way. Apart from expectations of a continued tough market, prospects are good. We believe in what we are doing.