Nelly Group (NELLY) Q2 2024 earnings summary

Executive summary

• Net revenue grew 8.8% year-over-year to SEK 314.1 million in Q2 2024, with gross margin improving to 54.7% and operating profit reaching SEK 30.5 million.

• Profit after tax was SEK 26.7 million, and operating margin rose to 9.7% from 2.7% year-over-year.

• Five consecutive profitable quarters were achieved, reflecting the success of transformation initiatives and cost control.

• Strategic collaborations, new core IT systems, and increased marketing investments supported growth and operational improvements.

• Rite Ventures increased its stake to 34.06% following a bid not recommended by the Bid Committee.

Financial highlights

• Gross profit increased to SEK 171.9 million, with gross margin rising to 54.7% from 49.0% year-over-year.

• Warehousing and distribution costs fell to SEK 42 million, improving as a share of net revenue to 13.4% from 17%.

• Marketing costs rose to SEK 41 million, representing 13% of net revenue, up from 10.2% last year.

• Cash flow from operations was SEK 106 million, with cash and cash equivalents at SEK 219.9 million as of June 30.

• Equity/assets ratio improved to 23.8% from 18.7%, with no interest-bearing debt apart from government tax credits.

Outlook and guidance

• Continued focus on profitable growth, with further improvements in assortment, IT infrastructure, and marketing efficiency planned.

• Ongoing initiatives to lower return rates and increase own brand share are expected to support future profitability.

• IT system upgrades and transformation will continue into 2025, aiming to enhance customer experience and operational flexibility.