Scandinavian upholstery manufacturer Ekornes ASA, owners of the renowned Stressless label, has reported a decline in UK sales for the first half-year results for 2016, while confirming downsizing its Stressless operation.
According to its Q2 results, total revenues in the UK and Ireland fell 9.8% to £3.7m, compared to £4.1m over the same period in 2015.
Revenue slipped from its positive start to the year, posting sales of £5.6m in Q1 2016, resulting in a 33.9 fall on a quarter-to-quarter comparison. Overall, UK and Ireland half year sales fell by 2% to £9.3m from £9.5m.
Within Europe, its homeland of Norway posted a total rise of 6% to NOK 279.5m. Revenue across Central Europe and Southern Europe both experienced a fall of 3% to €41.7m and 5% to €18.9m respectively.
Total group sales for Q2 rose 1.4% to NOK 759.5m, while pre-tax profit practically doubled against the same period last year to NOK 84.9m, with overall half year pre-tax profit up by 75% to NOK 252.9m.
Ekornes said within the report that the improvement was attributable partly to a reduction in volume as a result of realisation during the quarter, and partly to a currency strengthening of the NOK through the period.
Furthermore, Ekornes indicated that it has decided to consolidate the production of its Stressless sofas by reducing its Norwegian sites from two to one, closing its factory in Hareid and transferring all its operations to the Vestlandske factory in Sykkylven.
“The merger will result in a necessary adjustment in capacity and more efficient production. This is expected to reduce the cost base by more than NOK 10m by the close of 2016,” said Ekornes.
The move follows a fall in gross operating revenues of NOK 575.1m in the Q2 2016, NOK 8.6m less than in the corresponding period last year for Stressless.
Ekornes highlighted that its objective is to reduce the cost base by NOK 150m by the close of the year, identifying the necessity of accelerating ‘cost-cutting’ initiatives.
The company concluded: “A number of initiatives have been implemented in all the company’s business segments, though the majority will come in the Stressless area.
“The rationalisation of Stressless sofa production is already underway, while other initiatives, such as the streamlining of the company’s logistics systems remain ongoing.”