Pierce Group (PIERCE) Q1 2025 earnings summary

Executive summary

• Achieved 13% year-over-year revenue growth in Q1 2025 to SEK 401 million, driven by strong Onroad sales despite weak consumer sentiment and market headwinds early in the quarter, with a significant sales recovery in March.

• Gross margin declined to 42.6%, down from 45.6% last year, due to a mix shift toward Onroad, higher inbound freight costs, and lower obsolescence reversal.

• Adjusted EBIT was SEK -11 million, compared to SEK +7 million in Q1 last year, impacted by transformation costs, FX effects, and a negative sales mix.

• Cash position ended at SEK 175 million, with negative cash flow due to planned inventory investments to support growth.

• Transformation strategy focused on IT modernization, geographic expansion, and scaling adjacent verticals.

Financial highlights

• Net revenue: SEK 401 million (up 13% year-over-year); Onroad sales up ~30%, Offroad up ~9%.

• Gross margin: 42.6% (down 3 percentage points year-over-year), mainly from product mix, freight costs, and lower obsolescence reversal.

• Adjusted EBIT: SEK -11 million (-2.7% margin) vs. SEK 7 million (2.0%) last year; adjusted EBITDA: SEK 4 million (down from SEK 23 million last year).

• Cash flow for the quarter: SEK -120 million; inventory: SEK 490 million (up SEK 158 million year-over-year).

• Earnings per share: SEK -0.43 (before and after dilution) vs. SEK 0.32 last year.

Outlook and guidance

• Transformation costs will continue through 2025 but are expected to taper off by year-end, with operating leverage anticipated to improve from 2026 as transformation and legacy system costs decline.

• New tech stack launching H2 2025 to improve data control, product presentation, and customer experience, with plans to launch localized websites in 12 new European markets.

• Strategic focus on broadening assortment, improving product availability, and expanding into adjacent categories and new European markets.

• Medium to long-term targets: outgrow the European online motorcycle gear market, achieve 5-8% adjusted EBIT margin, and maintain net debt/EBITDA below 2.0x.

• No major long-term shift expected in Private Label share; both Private Label and external brands targeted for growth.