Nelly Group (NELLY) investor relations material

Executive summary

• Net revenue declined by 1.8% year-over-year to SEK 243.3 million, mainly due to lower Nordic sales and a higher return rate.

• Operating profit dropped to SEK 8 million from SEK 19.9 million, with operating margin falling to 3.3% from 8% year-over-year.

• Gross margin improved to 55.3% from 51.6%, driven by a higher share of own-brand sales and favorable currency effects.

• Active customer base in the Nordics remained broadly flat, with a shortfall in new customer recruitment and lower conversion rates.

• The assortment lacked newness and key seasonal trends, impacting traffic, conversion, and average basket size.

Financial highlights

• Gross profit increased by 7 MSEK year-over-year despite lower net revenue.

• Operating expenses increased, with marketing costs rising to SEK 27 million (from SEK 24 million) and admin/other operating costs to SEK 69 million (from SEK 53 million), reflecting investments in growth and new roles.

• Operating cash flow was SEK -26.4 million, down from SEK -13 million year-over-year, mainly due to lower operating profit.

• Equity ratio improved to 42.9% from 29.1% year-over-year, with a net cash position of SEK 215 million.

• Inventory as a proportion of net revenue over the last 12 months was 16.1%, down from 18.1%.

Outlook and guidance

• Focus remains on curating a compelling assortment blending own and external brands to drive customer engagement.

• Continued disciplined execution and flexibility in responding to customer signals are emphasized for future quarters.

• Investments in Germany and Copenhagen flagship store are progressing as planned, with careful evaluation of further investments.

• Continued investment in purchasing and production processes to improve assortment accuracy and responsiveness.

• Profitable growth remains the primary goal, with deliberate investments to build the business for the future.