Q3 2022 – the quarter in brief
January–September 2022 – the period in brief
An ongoing journey with a high rate of change
In the third quarter, we experienced weak sales in a market characterised by high pressure to discount prices, lower traffic and customers who are more cautious in the prevailing economic situation. Net revenue decreased by 9% during the quarter. Our active choice to increase the level of campaign activity in relation to customers to sell off inventory has had a negative impact on the gross margin.
In 2022, Nelly rapidly implemented changes in its organisational structure and working methods to create a sustainable, scalable and profitable business model for the long term. We are still only in the beginning of our journey.
Clear cost efficiency measures in a tough market
Nelly aims to be a profitable e-commerce company offering fashion to young women in the Nordic region. To achieve this, we need to be really good in a number of areas:
Changing the range to create profitability
Nelly’s profitability is based on an attractive offering to our target group. Nelly’s model of offering our customers a curated, fashionable range with a mix of external brands with bestselling products from Nelly’s own brands means that we have flexibility in how we create our range and good opportunities to generate traffic and strong margins.
How the purchasing organization is organised has changed substantially, and our updated range strategy is based on a narrower but clearer range for our customers, allowing us to offer popular, profitable products in large quantities. At the same time, we have an even clearer focus on Nelly’s own brands, where our prospects for good margins are best.
The cost-saving programme that was previously communicated, which aims to reduce operating
costs by SEK 40–50 million per annum, is in full swing and is expected to take full effect from the second quarter of 2023.
Costs continue to move in the right direction in logistics, and the customer delivery experience is constantly improving.
During the quarter, we saw greater effectiveness in our marketing and lower costs in both actual and relative figures as a result of improved management of our mix of channels and cost allocation.
However good we become at managing and controlling our costs, our main focus is always on creating a strong, attractive offering for our customers. Our aim is always to be our customers’ first choice whether the outfit is for leisure, school, work or a party.
It feels great to be back at Nelly and see all our employees’ commitment to our customers and our business. We are in a challenging situation but, with the determination I experience every day in our organisation, I am convinced that we will return Nelly to profitability and growth again.
Ludvig Anderberg, CEO of Nelly Group AB
Borås, 25 October 2022
Nelly Group AB (publ)
501 13 Borås, Sweden
Corp. ID 556035-6940
Registered office: Borås
Visiting address: Lundbygatan 1, Borås
Webcast on the interim report
Analysts, investors and the media are invited to a webcast presentation of Q3 on 25 October 2022 at 10 a.m. CEST. The presentation will be given in English by Ludvig Anderberg, CEO, and John Afzelius, CFO. The webcast will be made available on the Nelly Group website.
Link to the webcast: https://nelly.videosync.fi/q3-2022
The presentation material and the webcast will be available at www.nellygroup.com/en/investors/presentations/