Fourlis shares closed down 1.22% at €4.45 yesterday ,, as the market appears to be focusing less on double-digit sales growth and more on the bottom line.
In the first quarter, the group recorded a 12.6% increase in sales to €133.1 million, while reporting a loss of €5.6 million, compared to a profit of €2.7 million in the same period last year.
However, during the conference call to brief analysts on first-quarter results, Fourlis management appeared reassuring regarding the group’s performance, confirming that the sales target of approximately €645 million remains in place.
The problem lies not in sales, but in costs. Management described an environment where inflationary pressures are simultaneously affecting energy, oil, and rents. From energy and fuel alone, the additional cost could exceed €2 million, while overall inflationary pressures could reach €3 to €3.5 million.
Added to this is Romania, which is emerging as the biggest wild card of the year. The market is, as management stated, in a “difficult and volatile period,” with political uncertainty, pressure on foot traffic, a lower average basket size, and promotions.
“It reminds me of the crisis in Greece,” said Yannis Vasilakos during the call. The impact from Romania on EBIT could reach €3.5 million. If inflation is factored in, the total pressure amounts to €6 to €7 million.
Plans for a platform and IKEA
At the same time, the group is building a new, centralized retail platform, aiming for greater efficiency, better productivity, and the ability to support more concepts and more markets. However, the cost of centralization and reorganization could reach €6 to €7 million.
Management has left open the possibility of absorbing the bulk of the costs this year, so that the benefits will be realized starting January 1, 2027, or of deferring a portion to the first quarter of 2027. The decision will depend on market conditions in the coming months.
If Fourlis absorbs all the costs now, it will put pressure on 2026 profitability but clear the way for 2027. The restructuring could yield recurring benefits of €3.5 to €4 million starting in 2027, bringing it close to the target of improving the EBIT margin by approximately 50 basis points.
At the same time, Fourlis is not putting growth on hold. On the contrary, as mentioned during the conference call , retail CapEx is expected to be close to €25 million, of which approximately €4 million relates to maintenance, €6 million to digital and transformation, and the remainder to growth. An additional €2.1 to €2.2 million is allocated to the final phase of the new IKEA logistics center in Aspropyrgos. Inbound operations will begin in June and outbound in September, initially from Greece to Cyprus and Bulgaria, followed by Jordan, Israel, and eventually Egypt.
The home furnishings market is estimated to grow at a low single-digit rate, approximately 2% to 3%, but Fourlis believes it is gaining market share. The smaller IKEA formats, such as the one in Rhodes, are now seen as proof that the strategy is working. The opening in Corfu has been postponed to 2027, while Kalamata is being reconsidered as part of a broader plan. Limassol and Philippopolis remain on the agenda, while the goal is to secure more properties to accelerate the rollout of the new format starting in early 2027.
Regarding Foot Locker, management stated that the concept is moving forward as planned, despite an initial delay. The pipeline includes Glyfada, Metaxa, Volos, Lamia, Kallithea, and Erythraia, though management emphasized that the expansion will not be undertaken “simply to put stores on the map.” The key is to find “AAA locations” with high foot traffic and reasonable rent, so that each new location supports the concept’s profitability.
Regarding the Middle East, Fourlis management currently sees no significant impact on product costs, as prices for orders have already been locked in and IKEA appears to be absorbing part of the transportation pressures.
If the situation persists, the impact may be more evident in the 2027 product lines. After all, the main concern today is the effect of inflationary pressures on consumers’ disposable income.