Lyko

The Nordic region continues to deliver strong growth and profitability, supported by our strategic investments in our store portfolio during the quarter. In Europe, while we are actively adopting a more cautious approach, we manage to deliver a modest growth. We continue to invest in our organization and infrastructure to prepare ourselves for becoming a larger company. During the quarter, we transitioned to a matrix organization where central functions support all country teams to adapt locally to consumer preferences in the best way possible.
 
Compared to a year ago, we now have seven country managers in place, and it is worth noting that we also have a country manager for our first market, Sweden. As part of our internationalization, we are also moving towards releasing our quarterly reports in English.
 
The second quarter is typically campaign-intensive, and despite price pressure in the market, we managed to keep the Nordic and European segments at unchanged gross margins compared to the previous year. However, overall margins were slightly impacted due to lower margins in Other businesses. The category mix affects us, but we are working hard with our suppliers to secure better margins. 
 
Our property costs are increasing, due to rent payments for the new warehouse building, our new office in Stockholm, and the stores at Sergels Torg and in Turku. While the latter two do not yet contribute significantly, they will have an impact later in the year. Our significant warehouse extension project in Vansbro is progressing according to plan, but we will see the effects after it becomes operational in the last quarter of next year. 
 
RETAIL-TAINMENT, MUCH APPRECIATED BY OUR CUSTOMERS 
Our retail business continues to perform strongly, highlighted by numerous successful events during the quarter. Particularly noteworthy is the opening in Turku, our second store in Finland, and the celebrations after the reopening following the renovation of our store on Karl-Johan, Oslo and in Emporia, Malmö. 

SCENT-SATIONAL LAUNCH OF OUR NEW UNIQUE VISUAL CONCEPT 
We continue to make broad investments in marketing and launched a new brand concept during the quarter, "Welcome to your beauty playground," which has been well-received and provides a unique visual experience, while extending our brand promise "Your Beauty Playground."
 
During the quarter, we acquired the remaining 60 percent of Loveli Beauty AB, which owns the brand and Swedish nail innovation LOVE’N LAYER. Our long-term commitment to developing a portfolio of own brands is paying off, and the share of Own Brands continues to grow, now accounting for 7 percent of total sales on a rolling 12-month basis.
 
When parts of the organization now go on a well-deserved vacation, the packing of this year's Christmas calendars and other preparations for the second half of the year are already under way.
 
Thank you to all Lyko-stars for a fantastic first half of the year!

Rickard Lyko, CEO July 18th 2024