Ellos Group (ELLOS) Q2 2024 earnings summary

Executive summary

• Adjusted EBITA rose 21.8% year-over-year to SEK 50.3 million in Q2 and 46.6% to SEK 70.5 million for H1 2024, reflecting improved efficiency and cost control.

• Net sales declined 1.9% in Q2 and 3.8% for H1 2024, with organic sales down 1.9% and 3.6% respectively, amid subdued consumer demand, especially in home furnishings.

• The group advanced in segments like sport- and leisurewear, underwear, beauty, and launched new initiatives such as 'Kitchen & Coffee.'

• Inventory levels remain well balanced, though cash flow was impacted by increased inventory and pledged cash for guarantees.

Financial highlights

• Q2 net sales: SEK 786.8 million (-1.9% YoY); H1 net sales: SEK 1,556.8 million (-3.8% YoY).

• Q2 gross margin: 41.3% (down from 42.6%); adjusted gross margin: 43.6% (up from 42.6%).

• Q2 adjusted EBITA: SEK 50.3 million (up from SEK 41.3 million); margin: 6.4% (up from 5.2%).

• Q2 operating loss: SEK -5.2 million (down from SEK 13.8 million profit); margin: -0.7%.

• Q2 net loss: SEK -48.5 million (improved from SEK -82.3 million).

• Q2 cash flow from operations: SEK -1.3 million (down from SEK 27.2 million); adjusted cash flow: SEK 25.1 million.

Outlook and guidance

• Management remains cautiously optimistic, focusing on core customers, efficiency, cost reduction, and cash flow improvement for the remainder of 2024.

• The group expects continued market challenges due to subdued consumer purchasing power and geopolitical uncertainty.