Ivo Nikkolo: Navigating Economic Challenges and International Ambitions
The first five months of the year have posed significant challenges for the retail sector, particularly in Estonia. A combination of economic pressures, political decisions, and shifting consumer behaviors over the past year has resulted in lower-than-expected sales figures for many retailers in the apparel industry. In stark contrast, retail markets in Latvia and Lithuania have shown robust performance, with most retailers in these countries, including us, reporting steady growth and stronger sales. This disparity highlights the unique economic landscape of Estonia and raises important questions about the factors influencing consumer spending and retail success.
| EUR’000 | 2024 | 2023 | +/- | Sale share 2024 | Sale share 2023 | +/- (pp) |
| Retail | 2 974 | 3 325 | -11% | 88% | 90% | -2% |
| Online | 399 | 387 | 3% | 12% | 10% | 2% |
| Total | 3 373 | 3 712 | -9% |
In the first five months of 2024, our total revenues amounted to 3,373 thousand euros, reflecting a 9% decrease compared to the previous year. The decline in sales comes from our retail segment, whose five-month revenues were 2,974 thousand euros, compared to last year’s 3,325 thousand euros. On the other hand, we have continued our growth in the online segment compared to last year’s record results.
The decline in our retail segment can be attributed to two main factors:
Firstly, for over a year, there has been a widespread market-wide decrease in demand for clothing and footwear across the Estonian market. This decrease in demand has also impacted the sales of Ivo Nikkolo products, which explains the 15% decline in revenues in Estonia.
Secondly, in 2023, we initiated a restructuring of the Lithuanian retail market, resulting in the closure of four non-performing Ivo Nikkolo stores. This strategic decision was pivotal in aligning our store network with market demands and profitability objectives. While Lithuanian total revenues have decreased by 17% over the past five months, the performance comparison of the remaining stores against last year reveals a remarkable net sales growth of 21%, indicating a promising path towards a profitable year in Lithuania.
| Revenue | Sales per m2 (monthly) | ||||||||||
| EUR ’000 | 5M 2024 | 5M 2023 | +/- | 5M 2024 | 5M 2023 | +/- | |||||
| Estonia | 1 331 | 1 575 | -15% | 116 | 121 | -4% | |||||
| Lithuania | 714 | 861 | -17% | 119 | 89 | 33% | |||||
| Latvia | 929 | 889 | 4% | 110 | 110 | 0% | |||||
| Total | 2 974 | 3 325 | -11% | 115 | 105 | 9% | |||||
At the end of May, we operated 22 Ivo Nikkolo stores with a total sales area of 5,221 m², which is 15% less than in the beginning of the year 2023. The reduction in the size of our retail network occurred in 2023, with the closure of one store in Estonia and four stores in Lithuania. Additionally, during the same period, we undertook renovations that resulted in the downsizing of several of our stores.
| 31.05.2024 | 01.01.2023 | Average area change | |
| Estonia | 9 | 9 | -7% |
| Lithuania | 5 | 8 | -37% |
| Latvia | 8 | 7 | -1% |
| Total stores | 22 | 24 | |
| Total sales area, sqm | 5 221 | 6 138 | -15% |
Our e-commerce experienced a 3% growth compared to the same period last year, reaching 399 thousand euros. The growth can be attributed to the continuing success of our omnichannel strategy and the enhanced functionality of our Ivo Nikkolo e-store. This year will be an important milestone for our online segment. In the second half of the year, we are scheduled to launch Ivo Nikkolo on at least two major marketplaces, paving the way for international growth in the European market.
Despite significant challenges, our people have demonstrated resilience and strategic foresight. While total revenues have declined in the first five months of 2024, the decline can be attributed largely to the challenges in the Estonian retail sector. Continuing organic growth in Latvia, the positive impact from the restructuring of the Lithuanian retail market and the continued success of our our online sales highlight our commitment to aligning operations with market demands and profitability objectives. The upcoming launches on major marketplaces signal a promising trajectory for international expansion. As we move forward, we remain focused on leveraging these strengths to drive sustainable growth and secure our position in the competitive European market. Thank you to everyone at Baltika Group for the great work in the first five months.
Margus Olesk
Member of the Management Board
