BHG facing another difficult quarter with declining gorwth and profitability
The swedish DIY and home pure play online retail conglomerate BHG has seen a radical reversal of fortunes during 2022. After the strong growth years during the pandemic have turned into declining growth and challenged profitability during last year. Especially difficult the situation is for the swedish segment, which saw revenued decline by -22%.
On the other hand, the Finnish part of the business was able to recover back to growth (+19,7%) after two declining quarters.
The profitability of BHG has decreased quite rapidly during 2022 from the EBIT margin of 5,6% in 2021 to -1,4% in 2022. Especially Q3/2022 was difficult for the company. During Q3/2021 the inventories started growing rapidly jumping from 41% of sales to 68% and further to 95% in Q1/2022.
The clearance of the inventory glut must have been expensive for BHG.
Besides the inventory clearance, BHG states that elevated fuel costs and weakened demand (leading to price pressure) have lead to the lower margins (-2,4%-points from Q4/2021).
For companies like BHG that have seen mainly strong growth in their history, year 2023 is a bellwether for the capabilities of the management and company culture. It is one thing to build growth on top of a rising tide. It is totally different thing to fight against the current and start building growth without crushing the good that has been built over the years.
BHG seems to be well equipped for the future as more and more of the DIY and Home decoration buying will start to move online.
Find more about BHG from our archives:
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