Lyko

The gross margin grows compared to the previous quarter but slightly declines compared to the same quarter last year, partly due to a shift in category mix and also because customers continue to seek promotions to a greater extent. We are on the right track with the work we initiated in the fourth quarter to strengthen the gross margin through adjustments of activation and price matching in the assortment. As we grow, the shifts in assortment will also affect us less over time.
In the quarter, we achieved significant economies of scale in relation to our logistics and marketing costs. This resulted in a relative decrease in other external costs from 22,8 percent to 20,7 percent of revenues.
Personnel costs increase slightly due to building an organization to manage and grow the business outside of Sweden.
     The EBIT margin in the quarter is in line with the previous year. The gross profit margin is slightly worse compared to the same quarter last year
 
LONG-TERM INVESTMENT STARTS TO PAY OFF
The Nordic region delivers strong growth of 24,0 percent with EBIT up 48 percent to 90,6 MSEK and an enhanced EBIT margin of 11,9 percent. We see continued good opportunities to gain market share in the Nordics, and we have chosen to prioritize growth. The stores continue to perform very well and constitute an excellent complement to e-commerce. During the quarter, we conducted many activations and events in our stores that worked very well and proved the strength of our omnichannel model. Successes in Finland continue, where we saw over 500 people queuing when we opened our new store in Turku in April, and in total, we grow by 88 percent in the first quarter compared to the previous year. We have also announced that we will open our fourth store in Norway, in a prime location in Bergen in the autumn.
     In Europe, our country managers continue the work of localizing our operations to find the right fit in each market. We prioritize controlling costs and plan for a lower growth rate in the short term to find a profitable core business in each market in the long term. At the same time, we see that we are bearing the costs of our warehouse hub in Berlin, leading to efficiencies. There is a position for us in these markets, and we refine our strategies to reach them with maintained profitability focus.
 
LYKO AI ENHANCES THE APP FURTHER
During the quarter, we launched Lyko AI in the app, which enhances the customer experience by making it easier to match customers' preferences to our products. We are convinced that over time, this will change which products customers consume as it becomes easier to get individually tailored recommendations.
Furthermore, we see that the app continues to take a larger share of online sales, enabling us to further strengthen customer interaction.

NEW BRANDS CAN MAKE A BIG DIFFERENCE
During the quarter, we obtained for the first time the rights to do an exclusive launch of a brand in our stores in Norway and Finland. We conducted it simultaneously in both countries, and the result was a great success with sales performing extremely well both in-store and online. This is evidence of the competent machinery we have built in the organization to handle these types of launches.
     Our organization for own brands has launched several product innovations during the quarter and relaunched Rebecca Stella Beauty. The completely new range has received fantastic reception from customers. At the same time, our Lyko Lovables packaging, released every month, continues to increase in popularity, and the latest one sold out in less than eight minutes. Overall, own brands accounted for 6,3 percent of sales compared to 5,1 percent the same quarter last year.
 
WAREHOUSE PROJECT DELIVERS
The expansion of our warehouse automation in Vansbro is proceeding according to plan, and already this summer, the majority of hardware will be in place, followed by the fine-tuning of the software to be ready for operation in autumn 2025.

Now, we are facing several major campaigns, and the organization is planning to invite our 300 largest suppliers to a supplier meeting in Vansbro to inform them about our plans and deepen our collaboration.

Rickard Lyko, CEO April 25th 2024