Swedish kitchen manufacturer Nobia, which also owns Magnet, has seen a massive downturn in its Q3 profits, and has also confirmed the closure of 15% of its UK stores.
In the UK, year-on-year sales growth was relatively flat. This quarter’s sales of 1.19bn SEK (approximately £85.2m) declined by roughly 1% over last year’s figure of 1.20bn SEK (£86.1m).
However, Nobia’s UK operating profit fell by a staggering total of almost 200% year-on-year, falling from 65m SEK (£4.6m) during Q3 2023, to -58m SEK (-£4.1m) at the end of the latest quarter.
These financial results are also consistent with the trend of Nobia’s end-of-year results released in February, when it reported a concerning 150% drop in operating profits across 2023.
Nobia’s global net sales were also down by roughly 6%, from 2.69bn SEK (£192.3m) this time last year, to 2.47bn SEK (£176.7m) at the close of Q3 2024.
In a statement accompanying the financial results, Nobia president and CEO, Kristoffer Ljungfelt, confirmed that the company had also closed 15% of its UK retail network, and reduced its number of manufacturing sites from 5 to 2.
Earlier this year, Nobia first disclosed it was looking to close some of its “underperforming” UK stores in an effort to transition to an “asset-light model” of business.
At the time, Nobia said it believed that these measures will result in annual savings of approximately SEK 160m (approximately £11.9m), which it estimates will reach full effect by 2025.
In addition to the 15% of stores already said to have closed, Ljungfelt also said that the company is also “evaluating additional actions, including a further review of the store network”.
Discussing the financial results, Ljungfelt commented: “The kitchen market remained weak in the third quarter primarily due to decline in the project market across all regions. Consumer market showed signs of recovery with most of our brands experiencing an increase in design appointments and improving quote banks from consumers.
“Total net sales in the UK remained flat compared to last year, despite a substantial decline in volume due to weaker trade and project sales. Growth in consumer sales was not enough to compensate for the loss in volume, which resulted in under absorption in our supply chain.
“Gross margin fell in the quarter due to lower volumes and lower average order values in the consumer channel. To improve gross margins, we are adjusting our product offering to strengthen average order values. The cost reduction initiatives implemented earlier in the year generated savings according to plan.”
Looking ahead to the next quarter and beyond, Ljungfelt said: “We are advancing with our strategic agenda by gradually ramping up operations in Jönköping, executing our UK turnaround plan and expanding cost-saving initiatives. Given the ongoing market challenges, we are also intensifying our efforts to enhance operational excellence within our new organizational structure including a strong focus on cash generative activities, with encouraging signs of progress already emerging.”
Ljungfelt was appointed CEO and president of Nobia earlier this year, after his predecessor, Jon Sintorn, announced he would be stepping down from the company in June.
Prior to the promotion, Ljungfelt was Nobia’s head of region for the UK. After he assumed the role of CEO, former Magnet director George Dymond was appointed to fill the position Ljungfelt was vacating.
Despite the poor financial results, Magnet announced earlier this year that it was opening its first-ever franchise store. The showroom, which opened in June in Tunbridge Wells, was billed by the company as a ‘significant milestone in Magnet’s growth journey’.
