Nelly Group (NELLY) Q3 2024 earnings summary

Executive summary

• Net revenue for Q3 2024 increased by 1.4% year-over-year to SEK 239.6 million, driven by a lower return rate and higher own-brand sales.

• Gross margin improved to 54.5% from 50.7% in Q3 2023, supported by reduced campaign activity and a higher share of own-brand sales.

• Operating profit rose to SEK 25.1 million (10.5% margin), up from SEK 12.8 million (5.4% margin) in Q3 2023, reflecting ongoing transformation and operational improvements.

• Profit after tax reached SEK 22.3 million, with EPS of SEK 0.74, compared to SEK 9.1 million and SEK 0.30 in Q3 2023.

• Own brand share increased to 45.2% from 39.4% year-over-year, with most top sellers and flagship store assortment from in-house brands.

Financial highlights

• Net revenue: SEK 239.6 million (up 1.4% year-over-year); local currency growth was 3.6%.

• Gross profit: SEK 130.7 million; gross margin: 54.5%.

• Operating profit: SEK 25.1 million, up from SEK 12.8 million year-over-year; operating margin improved to 10.5% from 5.4%.

• Cash and cash equivalents at 30 September 2024: SEK 190.4 million, with no short-term credit utilized.

• Warehousing and distribution costs reduced to SEK 28 million (11.7% of revenue), down from SEK 33.7 million (14.3%).

Outlook and guidance

• Focus remains on profitable growth, further increasing own brand share, and optimizing return rates.

• Ongoing IT system optimization and investments in infrastructure expected to continue through 2025, aiming to enhance customer experience.

• Inventory levels considered healthy entering Q4, with typical seasonal build-up.

• Q4 expected to benefit from Christmas trade and holiday season, with continued emphasis on long-term improvements.