Relatively good, compared to the broader market, retail sales results in the clothing and footwear category for the first quarter were also reflected in Monnari Trade's revenues. Despite the fact that the first quarter is usually the worst for clothing companies and the fact that Monnari Trade has reduced the number of stores and sales space, the Company generated a record-breaking quarterly revenue of PLN 67.5 million, which is partly due to higher prices of the products offered.
The Company also managed to maintain a relatively high gross margin on sales at the level of 55.4%. Nevertheless, the environment of high inflation in Poland also generates strong pressure on the Company's cost side. Selling costs increased by 21.2% y/y, although we perceive this rather as a consequence of higher revenues due to the fact that the cost of renting space in shopping malls is related to the sales revenue. On the other hand, the increase in general management costs by as much as 57.4% is based on growing wage requirements and the general increase in prices in the country, which we assess negatively.
On the other hand, we positively assess the fact that, despite the loss on operating activities, the Company managed to generate a positive net result at the end of the first quarter, which is partly due to high financial revenues (Monnari Trade invested surplus cash after selling part of Geyer's Gardens).
Finally, we are lowering our valuation to PLN 7.3 (from PLN 7.8) per share at the end of 2023, which is mainly due to the decrease in the multiples of comparable companies.
