Nelly

Q3 2024 – Financial highlights
•Net revenue was SEK 239.6 (236.4) million, corresponding to a rise of 1.4% (-16.9%)
•Gross profit was SEK 130.7 (119.8) million, corresponding to a gross margin of 54.5% (50.7%)
•Operating profit was SEK 25.1 (12.8) million, corresponding to an operating margin of 10.5% (5.4%)
•Profit after tax was SEK 22.3 (9.1) million, corresponding to earnings per share of SEK 0.74 (0.30)
•Cash flow from operating activities was SEK -18.5 (-13.9) million
•Cash and cash equivalents as at 30 September amounted to SEK 190.4 (120.4) million, with credit facilities unutilised

9M 2024 – Financial highlights of the first nine months
•Net revenue was SEK 775.9 (759.2) million, corresponding to a rise of 2.2% (-16.7%)
•Gross profit was SEK 411.7 (357.0) million, corresponding to a gross margin of 53.1% (47.0%)
•Operating profit was SEK 57.0 (-13.1) million, corresponding to an operating margin of 7.3% (-1.7%)
•Profit after tax was SEK 47.1 (-21.2) million, corresponding to earnings per share of SEK 1.57 (-0.85).

Significant events during the quarter
•No material events were reported during the quarter

Significant events after end of quarter
•No material events have been reported since the end of the quarter.

Major progress made on the journey towards a healthy business
During the third quarter, we delivered further improvements in several of the areas that are crucial for a healthy business. The gross margin grew to 54.5% (50.7%) and the return rate decreased to 27.1% (34.3%). Net revenue rose by 1.4% (-16.9%) and was SEK 239.6 (236.4) million for the quarter. Based on this continued positive trend, we achieved operating profit of SEK 25.1 (12.8) million and an operating margin of 10.5% (5.4%). Profit after tax was SEK 22.3 (9.1) million for the third quarter.

Developments also continued in the right direction in the range strategy. The range of variety decreased further compared with the previous year, the average quantities of our bestsellers increased and we achieved higher sell-through rates on the spring and summer range than in prior years. Several of the categories that are crucial for strong everyday fashion enjoyed significant growth and accounted for a major proportion of sales. We improved our position primarily in jeans, tops, trainers and knitwear, which started well prior to the autumn.

The proportion of sales of Nelly’s own brands continued to grow, reaching 45.2% (39.4%) in the third quarter. The range performed well during this period with both a higher proportion of full price sales and a lower average discount compared with the previous year. However, total sales were affected by several of our most popular products selling out on occasion and by the delayed appearance of autumn weather postponing demand for autumn wear, primarily jackets and boots.

Improved conditions for growth
As previously communicated, we have been working hard this year to improve the profitability of all paid marketing and we are now seeing gratifying signs of success. Our marketing costs as a proportion of net revenue did increase during the quarter to 9.9% (8.9%) but sales carried a lower average discount, and profitability per order grew compared with the previous year.

We are now focusing to a greater extent on boosting organic traffic, in particular via channels such as TikTok, on which higher intensity has produced good results. Somewhat higher traffic was achieved overall during the quarter compared with the previous year, but still with lower conversion in a cautious market climate in which we have focused less on discount-driven sales and have on occasion sold out of several bestsellers. There is clear potential to improve conversion going forward, both by ensuring adequate inventory of our most important products and by continuing to optimise the new IT system, which went live at the end of the second quarter.

This year to date, we have launched several new external brands and released unique products with brands such as Neo Noir and True Religion. New and existing external brands are very interested in working more closely with us, and this interest is growing. In particular, they want to be seen by and meet Nelly customers in our flagship store in Stockholm, which has now been open for a year. Customer interest in the store has continued to be high and the store delivered its best results to date in the third quarter. Going forward, we see great potential in our ability to continually offer Nelly customers more exclusive products and experiences, both online and in a physical store.

Focus on the important fourth quarter
Q4 will be an exciting quarter with the approaching Christmas trade and a holiday season in which Nelly continues to enjoy a strong position as the fashion destination of choice. During this period, we will, of course continue to push through a number of long-term improvements to strengthen the business further, while focusing on delivering a unique customer experience in the important final months of the year. Once again, I would like to take this opportunity to thank our wonderful customers, who have accompanied us on this journey, and of course all my colleagues, who continue to work tirelessly to build a healthy, strong Nelly.

Helena Karlinder-Östlundh,
CEO Nelly Group AB

Nelly Group AB (publ)
Box 690
501 13 Borås, Sweden
Corp. ID 556035-6940
Registered office: Borås
Visiting adress: Lundbygatan 1, Borås

Webcast of the third quarter 2024
Analysts, investors and the media are invited to a webcast presentation of Q3 on 25 October at 9 a.m. CEST. The presentation will be given in English by Helena Karlinder-Östlundh, CEO, and Niklas Lingblom, CFO. The webcast will be made available on the Nelly Group website.

Link to webcast: https://nelly.videosync.fi/2024-10-25-q3

To listen to the presentation by phone, the following call-in 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: 100431#
User ID: 20537#