Nobia, the parent company behind national kitchen retailer Magnet, says its UK business arm has returned to profitability for the first time in several years.
In its Q3 results released today, Nobia said that its UK business had delivered the strongest performance across the company this quarter. These positive results follow years of declining profits for the company, which it has been attempting to fix with a business recovery strategy over the last several years.
Nobia says the third quarter saw it make pre-tax profits of around £1m for its UK business, a significant improvement over the £2m profit loss reported last year. This also marks the UK business’ first profitable result since 2019.
Today’s Q3 results also show that Nobia’s UK business enjoyed adjusted operating profits amounting to just over £160k. According to Nobia, its UK like-for-like retail sales were also up by 5% this quarter, with average order values up by 12% year-on-year.
However, organic growth declined by 7%, which the company said was due to “ongoing challenges in the project market” and the fact that Magnet had reduced its number of UK stores. Nobia has also confirmed it has a total of 168 stores in the UK, down from 172 a year ago.
Magnet’s attempts to transition to an “asset light” store model have been well publicised in recent months, with former UK head George Dymond telling kbbreview earlier this year that the retailer was making a dedicated focus on smaller format stores.
Nobia’s group results – factoring in both UK and Nordic business – show that net sales decreased by around 3% to SEK 2,308m (approximately £184m) across the company this quarter.
Last week, Nobia also announced a non-cash impairment to its UK operations amounting SEK 1.9bn (approximately £152m) which is reportedly related to intangible assets. Nobia has clarified that this is not linked to its current performance, and instead reflects the UK business’ transition towards a more asset-light model.
Kristoffer Ljungfelt, Nobia’s president and CEO, commented: “Driven by improved gross margins and disciplined cost management, we have continued to reinforce our underlying profitability and operating cash flow in the quarter. In addition, the inauguration of Nobia Park, our new production site in Sweden, represents an important milestone in advancing our strategic agenda.
“Although we anticipate continued softness in project market volumes, especially in the UK, we are encouraged by strengthening consumer sentiments. We will continue to capitalise on our strong brands and capture share in the growing consumer market, while executing on our strategy by ramping up Nobia Park, improving gross margins through sales of higher-value products, and maintaining strict cost discipline.”
In related news, last week Nobia announced that its UK head of region, George Dymond, was stepping down from the role. He was succeeded by commercial & customer director Sophie Rose, who said she plans to continue with Dymond’s turnaround strategy for the business.
“This quarter’s results are a real reflection of the hard work, energy and belief of our people at Magnet,” Sophie Rose commented. “Returning to profit marks a major milestone in our three-year plan and clear proof that our strategy is working. With George’s leadership setting us on the right path, my focus now is on building on that momentum, driving the next phase of our growth with the right investment to accelerate our plan.”