Lyko (LYKO-A) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales grew 8.2% year-over-year to 763 MSEK, with strong Nordic retail and campaign activity, but growth slowed due to tough comparables and logistics backlogs.

• EBIT declined to 8.3 MSEK (1.1% margin), impacted by lower growth, operating expenses, and deferred revenue from campaign and advent calendar launches.

• Own brands approached 9.5% of sales, supporting margin improvement and uniqueness.

• Brand engagement and awareness increased, especially in Finland and Norway, with successful events and new brand launches.

• Retail outperformed online, with omni-channel strategy and app engagement driving business.

Financial highlights

• Group net sales reached 763 MSEK in Q3 2024, up 8.2% from Q3 2023.

• EBIT margin dropped to 1.1% (from 2.8% in Q3 2023); EBIT was 8.3 MSEK, down from 20.1 MSEK.

• Gross margin declined to 44.1% (45.2% in Q3 2023), with a negative rolling twelve-month trend due to category mix and pricing.

• Stock to sales ratio improved to 14% (vs. 18% last year); inventory levels at 14.1% of net sales.

• Cash flow from operating activities was 121.9 MSEK, with accounts payable up 33% year-over-year.

Outlook and guidance

• Focus remains on profitable growth in Europe and the Nordics, with less aggressive top-line pursuit in Q4.

• Warehouse extension and automation to increase capacity by 150% by next year, expected to ease current constraints.

• Strategic store openings to continue, with a new store in Bergen in Q4 and plans for 3-5 new stores per year in each country.

• Inventory levels remain low relative to sales, supporting cash flow ahead of the peak season.

• Expectation of longer delivery times during high season, but capacity is expected to be managed.