OREANDA-NEWS. Baltika's third-quarter profit was 151 thousand euros, that is 763 thousand euros improvement compared to continued operations loss of same period in prior year (-612 thousand euros). Results of all operations showed improvement to comparative period by 935 thousand euros.

Baltika's continued operations third quarter sales increased by 17% and it was with 14,648 thousand euros the best third quarter in last five years. Strategic objective is placing greater focus on the development of other sales channels and increase sales through wholesale and franchise and also in e-store. As a result other channels sales growths are high - wholesale and franchise growth was 56% and e-channel 85%. The quarter was also strong in retail, where sales revenue grew by 12%, totalling with 12,664 thousand euros.

Third quarter was successful for all of Baltika's markets. The economic situation in Baltic countries remained stable although consumer confidence showed rather signs of weakening. In spite of the economic situation influencing the business and stronger competition, Baltic countries showed double-digit growth numbers (+14%), good results owing mainly to collections sales success. Likewise, the sales in Russia, with its unstable economic environment, showed in third quarter 6% growth figures despite of the average sales area decrease by 6%.

Company gross profit margin in the third quarter was 49% that is on the same level as in the same period prior year. Thereby taking separately retail, there has been an improvement in gross margin by 1.8 percentage points. Gross margin remained on the same level due to increase of proportion from 8% to 12% of wholesale and franchise channel that has lower gross margin.

With the good sales in both retail and through other channels the third quarter resulted in 151 thousand euros net profit. Together with the discontinued operations the nine months net loss was 1,683 thousand euros, which includes the loss from allowance for assets in Ukraine of 1,095 thousand euros. Three quarters continued operations net profit was 354 thousand euros, which is 55 thousand euros better result than in the same period prior year.

Highlights of the period until the date of release of this quarterly report

AS Baltika announces that public offering of bonds, decided on the Annual general meeting of shareholders held on 28 April 2014, was exercised in July in full, i.e. all 600 offered bonds in the total amount of 3,000,000 euros. 3-year bonds carry 6.5% interest p.a. Each bond will give its owner the right to subscribe 10,000 shares of the Company with the subscription price of 0.50 euros. Total of 691 shares were subscribed for which means over-subscription of 1.15 times. The bonds were issued on 28 July and oversubscribed bonds were cancelled.

Baltika launched new bonus program AndMore in the second quarter in Estonia and Lithuania, in October in Latvia. This allows using program advantages in all of Baltika's six different brand stores instead of current by only one brand. Bonus program offers clients among other two times longer return period and personalised offers and discounts.

Season opening event took place on 7th of August at port Noblessner and brought new records with attendance numbers. More than 800 guests from Estonia and abroad were there to see new season collections of both Baltika own brands and one operated under franchise.

E-com expanded in August from solely Monton brand to representing all Baltika brands. E-store andmorefashion.com, with new technical solution, provides shopping opportunity for wider customer circle and was already noted by Estonian Traders Association in the Trade Action of the Year contest.

AS Baltika signed in the beginning of September franchise agreement with Russian company "Gold Button" to open Baltika's brands stores in Russia. Retail company "Gold Button" already operates in Moscow under franchise agreement brands Eterna (7 stores), Tom Farr (12 stores) and Savage (5 stores). Partner has opened by the end of October flagship stores in Moscow for all the planned brands - Baltman, Ivo Nikkolo, Monton and Bastion.

Baltika Group closed in third quarter 4 stores in Russia: Mosaic stores in Krasnodar Mega, Ufa Mega, Jekaterinburg Mega centres in August and Monton store in Ufa Semja shopping centre in September. In addition to stores in Russia, Bastion store was also closed in July in Estonia, Viru Keskus shopping centre. Baltika's franchise stores line saw addition of two new stores in September. Franchise partner Gold Button opened first Baltman store in Russia in Moscow and franchise partner Mirworld opened first Monton store in Tenerife.