• Q3’18 worse than exp., FX-adj. sales growth -10%
• New cost initiatives to save hundreds of SEKm
• Estimates under review

Accelerating negative growth, driven by change in retail
Friday afternoon (CET), ITAB profit warned its sales development in early Q3’18 had been worse than expected, affecting the Q3 results negatively. FX-adjusted sales Jan-Sep are supposedly down 7% y-o-y, implying ~10% negative growth in Q3’18, vs. negative 3% growth in H1’18. The reason for the accelerating poor development is the ongoing changes within retail, with online migration causing traditional retailers to close stores and cut down on store investments. Consequently, ITAB expects some parts of its market to stay cautious throughout the year, implying that Q4’18 will be challenging too.

Expands cost savings program to hundreds of SEKm
To mitigate the poor sales development, ITAB is increasing its non-quantified cost savings program (launched in Q1’18), in order to save “hundreds of SEK millions” through merging, divesting and streamlining divisions. At least 200 of ITAB’s current 3,500 employees will be affected, with the majority within sales and marketing, according to ITAB’s CEO. More information on the current market development and the new cost savings initiatives will be disclosed in conjunction with ITAB’s Q3 report, on 26 October.

Estimates too high and under review
We acknowledge that our current estimates for ’18 are most certainly too high. As we are still in the process of transferring coverage to a new analyst, our estimates are being reviewed. A more comprehensive research report with updated estimates will be released in due course.