TALLINN — Tallinna Kaubamaja Group (TKG), one of the biggest retail companies in Estonia has stunned the stock market by returning to profit in the second quarter of this year.

The corporation, viewed as a significant barometer of consumer sentiment and state of the Estonia’s national economy in general, returned to profitability it reported in its recent results announcement.

Results announced to the NASDAQ OMX stock market showed that recent trading losses finally ceased and the group returned to profit to the tune of 13.9 million krooni (€0.9 million).

The stock market reacted with surprise and at 3 p.m. today resulting in their shares climbing to €4.64, a 22.75 percent rise. The improved results arose after sales increased by five percent to 3.2 billion krooni in the first six months of the year.

The group also negotiated lower prices with its partners and suppliers. Significant progress was made in reducing logistics costs, a key cost in supermarket businesses, and labor costs. A wage reduction of 10 percent for office staff took affect from April 1 and the sales force was reduced through natural wastage. Also a non-performing footwear store was closed.

The results declared by Mr. Raul Puusepp, Chairman of the Board, are not comparable with the profits produced in previous years but are better than market analysts expected.

TKG has two of the largest department stores in Estonia, one located in The Viru Centre in Tallinn and the other in Tartu. Last year these stores serviced 345,000 customers, equivalent to 27 percent of Estonia’s population.

They also own the Selver supermarket chain and have real estate and car sales divisions.