First nine months
Comments by the CEO
Paul Fischbein, President and CEO comments: “The third quarter was characterised by significant operational changes and market related challenges such as negative currency effects and lower consumer demand in Finland and Norway. Sales in Sweden remain strong. We have finalised several key operational initiatives and investments which create the right conditions to reach our long term profitability targets. Our strong balance sheet, including healthy inventory levels and a net cash position, provides an overall stable financial position. In combination with the completed projects, this gives us a stronger platform that can facilitate increased volumes and future profitability.
To accelerate the development of CDON Marketplace, we have strengthened the management team including a new CEO, CFO, Head of Marketplace and a Head of Operations. Additionally, the warehouse consolidation has been completed, in line with cost estimates. All warehouse operations are now carried out in a new and modern central warehouse, enabling coordinated deliveries and an improved customer experience.
Lekmer has, during the quarter, focused on deploying its new highly automated warehouse. The deployment of the warehouse took longer than planned and operational disturbances had a larger impact on sales than expected. As a result, sales and earnings in the third quarter were below our expectations. Warehouse operations have now returned to normal levels and so far in October sales are growing again.
Nelly continues to show strong growth on the Swedish market, amounting to 22 percent in the third quarter. The Nordic focus has led to declining sales outside the Nordics. This was expected but nevertheless had a negative effect on growth in the quarter. An important part of Nelly’s strategy is to increase the share of private label sales. It was therefore important that the share of private label sales continued to grow and amounted to 32% of Nelly’s turnover during the quarter. Nelly’s underlying earnings improvements were overshadowed by substantial negative currency effects, in comparison to the third quarter last year, mainly attributable to more costly purchases in USD and GBP.
To secure continued strong sales and profitability within Gymgrossisten, we have completed a reorganisation which will result in a sequential cost saving which on an annual basis amounts to approximately SEK 8 million. Tretti continued to show impressive and steady growth, which amounted to 18% in the third quarter.
We are also pleased to see that Qliro Financial Services continues to develop at a high pace, both in Sweden and in Finland. During October, the payment solution was also launched in Denmark and when we receive approval to become a credit market company we expect to launch the payment solution in Norway as well. In addition to the payment solution, Qliro Financial Services is working on launching additional financial services and we are, for example, planning to introduce deposits from the public after approval to become a credit market company has been received. Since the launch, in December 2014, the company has handled over 2.4 million transactions from over 1 million unique customers and business volumes exceeding SEK 1.9 billion. These are impressive volumes generated in a short period of time, showing the future potential of Qliro Financial Services. Clearly, this is very exciting.
To summarise, we now have a stronger platform in place and we look forward to the important fourth quarter.”
For additional information, please visit www.qlirogroup.com or contact:
Paul Fischbein, President and Chief Executive Officer
Tel: +46 (0) 10 703 20 00
Nicolas Adlercreutz, CFO
Tel: +46 (0) 70 587 44 88
About Qliro Group
Qliro Group is a leading e-commerce group in the Nordic region. Established in 1999, the Group has expanded its product portfolio and is now a leading e-commerce player within consumer goods and lifestyle products through CDON.com, Lekmer, Nelly (Nelly.com, NLYman.com, Members.com), Gymgrossisten (Gymgrossisten.com/Gymsector.com, Bodystore.com, Milebreaker.com) and Tretti. The payment service solution Qliro is also part of the Group. In 2014, the Group generated revenue of SEK 5.0 billion. Qliro Group’s shares are listed on the Nasdaq Stockholm MidCap list under the ticker symbol “QLRO”.
The information in this interim report is that which Qliro Group AB is required to disclose under the Securities Markets Act. This information was released for publication at 08:00 CET on 21 October 2015.