Clas Ohlson scales back UK expansion plans in tough market

The retailer had planned to open 6-10 stores by the end of the current financial year, but will instead open 4-6.

Clas Ohlson operates 11 stores in the UK, with shops opening in Norwich, Cardiff and Doncaster this month. It also has stores in Birmingham, Manchester, Reading, Kingston, Watford, Liverpool and Leeds, as well as Croydon, where it debuted in 2008.

In the second quarter to October 31 group sales totalled Skr 1.4bn (£132m), up 5% on the same period last year. Operating profit fell 18% to Skr 119m (£11m), which the retailer blamed on start up costs of launching in the UK

In the UK sales soared 193% to Skr 51m (£4.7m).

In an update to the Swedish Stock Exchange Clas Ohlson said: “During the second quarter, the UK economy was strained by fiscal cutbacks designed to improve government finances. The weaker trend in the UK retail sector is presenting continued opportunities for contracting attractive locations for new stores. Clas Ohlson is evaluating potential new locations carefully and is balancing the rate of expansion to match the prevailing market conditions.”

It added that customer response to the UK stores has been “positive”, and that the number of visitors to the British stores “exceeds the group average”.

However, it said conversion rates and average purchase value continue to be lower than the group average, which it said is “generally the case in conjunction with the penetration of new markets”.

It added: “Clas Ohlson anticipates that establishing its brand name and position in a completely new market will take time and that the conversion rate, average purchases and sales revenues will gradually increase in coming years.”