May 3, 2018 / 11:29 AM / 2 years ago

Sweden's Clas Ohlson sees growth in online, new DIY service

STOCKHOLM (Reuters) - Clas Ohlson (CLASb.ST) will look to e-commerce, its Nordic home markets and a new home jobs service to power sales growth, the Swedish budget retailer said on Thursday.

Under new CEO Lotta Lyra, Clas Ohlson, which sells a broad range of DIY and other products ranging from cleaning supplies to home electronics, has been reviewing its strategy.

In December it halted store expansion in the Nordics amid a rapidly changing retail market and sluggish store sales which have seen its shares fall by a third over the past six months.

The company, which hosted a capital markets day on Thursday, raised its annual target for organic sales growth to five percent from two percent over the next five years. Sales grew five percent the last fiscal year.

Clas Ohlson said it aimed for online sales to at least double every other year. They currently account for 3.5 percent of turnover, below market average, it said.

However, the firm set a new operating margin target of 6-8 percent over the same five-year period, down from the previous target of 10 percent. Last year, the margin was 7.8 percent.

It said that over the first two years, it expects to invest 1–2 percent of the underlying operating margin in strategic initiatives.

Shares in the Swedish firm were down 0.5 percent at 1207 GMT.

Last year, 85 percent of its 8 billion crown (665 million pound) turnover was generated in Sweden and Norway, and the rest in Finland, Britain, Germany and Dubai.

The company said it saw great growth potential in the Nordics and announced the launch of a new “Clas Fix It” service in partnership with service companies developer Pegital Investment.

The new service will help customers in Sweden with practical advice on how to use the tools they have bought from Clas Ohlson or carry out do-it-yourself projects for the customer.

“By developing our offering, we will get closer to our customers’ everyday lives, thereby becoming even more relevant and accessible to them,” CEO Lyra said.

Clas Ohlson in December bought a stake in Swedish online grocery store MatHem​, hoping to reach new customers via MatHem’s website as well as use its fast delivery services to the front door.

Reporting by Anna Ringstrom; editing by Jason Neely and Jon Boyle

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