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    Interim report for 1 January – 30 September 2023

    2023-10-27 10:00 - Regulatory press release

    Q3 2023 – the quarter in brief
    • Net revenue was SEK 236.4 (284.3) million, corresponding to -16.9% (-9.0%)
    • Gross profit was SEK 119.8 (118.1) million, corresponding to a gross margin of 50.7% (41.5%)
    • Operating profit was SEK 12.8 (-11.9) million, corresponding to an operating margin of 5.4% (-4.2%)
    • Profit after tax was SEK 9.1 (-15.9) million, corresponding to earnings per share of SEK 0.30 (-0.88)
    • Cash flow from operating activities was SEK -13.8 (-63.0) million
    • Cash and cash equivalents amounted to SEK 120.4 (40.7) million as at 30 September with credit facilities unutilised

    Q3 2023 – Significant events during the quarter
    • Nelly Group announced on 15 September 2023 that Niklas Lingblom had been appointed CFO. Niklas will start during January 2024, but will assume his position as CFO on 5 February 2024
    • On 28 September 2023, the Board of Directors of Nelly Group AB (publ) announced that the acting CEO, Helena Karlinder-Östlundh, had been appointed ordinary CEO

    January–September 2023 – the period in brief
    • Net revenue was SEK 759.2 (911.8) million, corresponding to -16.7% (-10.7%)
    • Gross profit was SEK 357.0 (407.0) million, corresponding to a gross margin of 47.0% (44.6%)
    • Operating loss was SEK -13.1 (-54.4) million, corresponding to an operating margin of -1.7% (-6.0%)
    • Profit/loss after tax was SEK -21.2 (-63.8) million, corresponding to earnings per share of SEK -0.85 (-3.54)
    • Cash flow from operating activities was SEK 8.9 (-157.3) million

    Significant events after end of quarter
    • No significant events have been reported since the end of the period

    A profitable quarter, driven by a stronger customer offer and continued cost control
    In Q3, we continued to see pleasing signs that our transformation work is generating results. Our gross margin improved compared to last year, landing on 50.7% (41.5%), and we achieved an operating margin of 5.4% (-4.2%). Profit after tax came in at SEK 9.1 (-15.9) million despite our net revenue decreasing by 16.9% to SEK 236.4 (284.3) million. This decrease was partly due to lower B2B sales following our decision to focus on B2C, which is Nelly’s core business.
    During the quarter, we delivered clear improvements across multiple areas, which were driven primarily by a more attractive assortment. Our autum/winter collection had a strong start, our bestselling products sold in higher quantities compared to last year, and we increased the share of full-price sales. Nelly’s own brands accounted for 39.4% (34.2%) of total sales and
    our return rate improved, landing on 34.3% (36.2%). The return rate improvement was partly due to a more favourable balance between party and everyday fashion in the product mix, but we also achieved improvements within several categories. Taken together, this shows that our customers are prepared to prioritise attractive and relevant products at the right price points even in this prudent economic climate.
    The positive trend we have seen in the development of our operating costs this year continued in the third quarter. Warehousing and logistics costs fell further, and we also reduced our marketing costs, both by continuing to focus on organic traffic and through better investments in generating paid traffic. Salary costs were also lower than last year given that the business is now run by a significantly smaller organisation.

    Our transformation work needs to continue unabated
    We have achieved clear improvements across several areas since our transformation journey began last year, and these have now resulted in two profitable quarters so far in 2023. This does not mean however that our transformation work is finished or that the rate of change can slow down. In addition to lower net revenue in Q3, we also saw a continued decline in traffic to our site and a lower conversion rate compared to the same quarter last year. We therefore need to continue to further strengthen our customer offer by creating an even more attractive and easy-to-navigate assortment at competitive price points.
    In Q3, we also intensified our work to overhaul our systems landscape and continued to prioritise those areas that enable a better customer experience and simplify internal processes. This work will continue in the coming quarters and can now be further accelerated with a new permanent Chief Technology Officer in place as part of Nelly’s management team.

    A positive platform to continue to build on
    We have now entered the last quarter of the year, which is an exciting time for our business. We look forward to Black Week and Christmas trading, during which we will also be able to interact with our customers in a physical setting for the first time through our newly opened flagship store on Drottninggatan in Stockholm. After a successful launch in September, the store now provides us with opportunities to present our assortment in new ways and to deepen our understanding of our customers, which will benefit our core business online as well. At the end of the quarter, we also announced both that we have a new permanent CFO starting with us during the first quarter of next year, and also that I was appointed permanently in the role of CEO for Nelly Group. I am grateful for the continued trust shown in me to lead this transformation journey forward and most importantly, I would like to express my sincere gratitude to our amazing customers and to the whole Nelly team for having delivered a profitable quarter and increasingly clear progress towards a truly competitive customer offer
    and a genuinely healthy business.

    Helena Karlinder-Östlundh,
    CEO of Nelly Group AB
    Borås, 27 October 2023

    Conference call/webcast of the third quarter 2023 interim report
    Analysts, investors and media are invited to a conference call at 9 a.m. CET. The conference call will be held in English and hosted by CEO Helena Karlinder-Östlundh and Ola Wahlström interim CFO.
    Note: It is only possible to ask questions in writing (not by phone). To submit questions you want answered after the presentation, please use the link below. It is possible to submit written questions both before and during the broadcast.

    Link to webcast:

    To listen to the report by phone, the following callin details are available:

    • Finland: +358 9 4245 0972
    • Sweden: +46 8 525 07003
    • United Kingdom: +44 20 7043 5048
    • United States: +1 (774) 450-9900

    Conference ID (PIN): 100382#
    User ID: 08155#